For Working Families, Growing Difficulty in Making Ends Meet

There is beginning to be some mention of income and social inequality in mainstream discussions. While it does not come up as often as it should – when it does it is often considered provocative.  In the past month the conversation has really been heating up, topped off by President Obama’s inaugural address in which he stated America “cannot succeed when a shrinking few do very well and a growing many barely make it.” Media outlets are highlighting the impact of income inequality in the United States and the ways that this gap obstructs economic growth.

A new report from the Working Poor Families Project (WPFP) reveals the extent of the problem for low-income families, and how the increase in the wage gap has spread over the last few years and across the United States. Although the economy is in recovery—the unemployment rate has declined, the housing market is recovering and the stock market is bouncing back—even with employment, millions of families are still struggling to afford basic needs. With incomes at just 200% of the federal poverty level and often with no assets, working families are vulnerable to unforeseen events that could suddenly drop them into poverty (e.g. job loss, accidents, costly medical issues).

Many of the jobs to which people are returning are not the pre-Recession middle class jobs they once had, but are a mix of part-time and low wage jobs. The WPFP report states in 2011, about one-fourth of adults in low-income working families were employed in just eight occupations, as cashiers, cooks, health aids, janitors, maids, retail salespersons, waiters and waitresses, or drivers.

Key findings from the report, include:

• The number of low-income working families in the U.S. increased to 10.4 million in 2011, up from 10.2 million in 2010.
• The total number of people in low-income working families now stands at 47.5 million.
• In 2011, there were 23.4 million children in low-income working families.
• There are 10 states, spread across the U.S., where the share of working families increased by 5% or more between 2007 and 2011.
• The richest 20% of working families took home 48% of all income, while those in the bottom 20% received less than 5%.

The high cost of living for low-income working families is significant. In 2011, 61% of low-income working families had a high housing cost burden—defined as spending more than 33% of household income on housing costs such as mortgage, rent and utilities. For working families below the poverty threshold, 81% had a high housing cost burden. Other expenses they deal with on a daily basis include transportation, made more difficult with the high cost of gasoline, and child care. For families that work long hours, nights and/or weekends, child care is especially burdensome.

This data proves that even though families are taking advantage of the employment opportunities available to them, they are still unable to make ends meet. Fortunately, there is a place for federal and state policymakers to begin to turn the tide on inequality. According to the Working Poor Families Project, policymakers can take actions to strengthen job growth and job quality by supporting the following policies:

• Raising and indexing the minimum wage;
• Providing all workers access to paid sick days and family leave;
• Enforcing work rules and wage standards; and
• Ensuring that if public job creation expenditures persist, they benefit workers and their communities

Beyond policies focused on employment, policymakers can help the economic security of families by supporting policies that control household costs, build household assets, and curb household debt. For more information on those ideas, visit CSSP’s Policy for Results webpage on reducing child poverty.