(January 2005) More than 25 percent of U.S. working families1—9.2 million households with 39 million people—earn such low income that they are struggling financially, according to a new report from the Maryland-based Working Poor Families Project.

The report, Working Hard, Falling Short: America’s Working Families and the Pursuit of Economic Security, found that one-third of all children in working families are in “low-income households”—defined by the report as earning no more than twice the poverty threshold, or $36,784 for a family of four in 2002.

The report also details how millions of low-income working families are a paycheck, accident, or emergency away from not making ends meet. For instance, over 50 percent of low-income working families pay more than one-third of their income for housing.

More than 37 percent of these families have a parent without health insurance. And more than two of every five do not receive paid parental leave.

“Most people can have empathy for what it might take to struggle on a $3,000 or less monthly paycheck,” says Brandon Roberts, manager of the Working Poor Families Project.

Roberts adds that 20 percent of all jobs available in the United States pay less than the poverty rate, leaving some families with stark choices.

For example, a family of four with two full-time adult workers making minimum wage earns $21,424 annually. If they live in Prince George’s County, Maryland, Roberts says, they will net an additional $2,000 in earned income tax credit—leaving them with $1,900 monthly income to live on, plus noncash transfers. “A two-bedroom apartment there costs $1,200 a month,” says Roberts.

Myths and Misconceptions About Working Poor Families

Working Hard, Falling Short came out of the efforts of the Working Poor Families Project, a four-year-old national initiative that assesses the needs of working adults and whether individual state policies to aid those adults are appropriate and effective. PRB did data gathering and analysis for the report, which was funded by the Annie E. Casey, Ford, and Rockefeller foundations.

The report focuses on low-income working families—a subject Roberts says has gotten short shift in recent policy discussions.

That silence comes, in part, he adds, from myths and stereotypes about the poor—that they don’t work, that they aren’t married, and that they are overwhelmingly minorities or immigrants. Working Hard, Falling Short explodes these misconceptions by highlighting facts such as:

  • 71 percent of low-income families work.
  • 72 percent of low-income working families have American-born parents only, and 47 percent have white, non-Hispanic parents only.
  • 53 percent of low-income working families are headed by a married couple.

Characteristics of Low-Income Working Families, Compared With Other Working Families

Number and percent of working families with selected characteristics, 2002

Working Families
200% of Poverty Level
Working Families
200% of Poverty Level
Number % Number %
At least one parent does not have a high school diploma 3,202,172 34.8 2,939,310 12.1
At least one parent has some post-secondary education 3,907,410 42.4 18,617,163 76.4
Spend more than one-third of income on housing 4,615,876 51.9 2,494,609 10.4
At least one parent without health insurance 3,382,083 36.7 2,066,278 8.2

Source: U.S. Census Bureau, American Community Survey and Current Population Survey.
Note: Figures for health insurance are annual average for 2001 to 2003.

Poor Education, Low Wages, and Uneven State Policies

What working poor families are likely to share, according to the report, are low levels of education and skills, low-wage jobs with insufficient benefits, and state policies that often do not aid their economic advancement.

Across the United States, 27 million adults do not have a high school degree—and low-income workers are almost three times more likely not to have finished high school than those who earn more. This education gap, Roberts says, has translated into a tremendous economic disadvantage.

“In the last 30 years,” he says, “real wages for workers who don’t have a high school degree declined 19 percent, while they increased 16 percent for workers who have a college degree.”

Working Poor, Falling Short also cites divergent state policies toward low-income workers as factors in the persistence of economic insecurity for many working poor families.

There are large disparities among the states in their contributions to skills training, literacy and adult education programs, and postsecondary education costs. States have also set substantially different minimum wages as well as income thresholds for Medicaid eligibility.

“In some states [such as Alabama, Arkansas, and Louisiana],” says Roberts, “you can lose your eligibility for Medicaid with as little as $4,000 in income.”

The Federal Role: Smarter Approaches That Don’t Cost More

But Working Hard, Falling Short calls on the federal government to play the critical role in addressing the plight of working low-income families.

Roberts says that only federal policymakers can focus national and local attention on the issue—by developing new policies and capitalizing on policies that have proven effective at the state level, all without spending more money in today’s extremely tight federal fiscal climate.

“Many of these programs were crafted at a different economic time,” Roberts says. “The needs of workers have changed, particularly in terms of economics and skills. Are we spending our resources in the best way? Even without putting new money on the table, a lot can be done to make these programs more effective.”

Unfortunately, he adds, existing federal policies and programs often do not have adequate measures of their effectiveness. Nor do they have economic self-sufficiency for families as their goal.

Roberts also says that federally-funded low-income efforts such as TANF or adult literacy and skills training programs need to track whether their clients are actually advancing in the labor market.

In a forum about the report held earlier this month at the New America Foundation in Washington, D.C., Brookings Institution senior fellow Ron Haskins lauded Working Hard. But Haskins added that the political will to make new federal policy toward low-income families does not exist.

“We’ve already expanded these programs dramatically,” said Haskins. “We are not going to have a new public policy that will help working families.”

Roberts says he agrees with Haskins that the federal government’s commitment to the working poor has greatly expanded over the last decade through the development of the earned income tax credit. But he says the effort lacks coherence.

“It’s not very coordinated or strategic in regard to these families,” says Roberts. “Why do we allow states to determine support levels for welfare, while the federal government sets food stamp eligibility levels? There’s much that we can do to make the system much more effective if we could only start thinking in those terms.”

Robert Lalasz is a senior editor at PRB.


  1. “Working families” are defined here as households whose total work effort by all members equals or exceeds 39 weeks per year. Of the 9.2 million working families in the United States who are low-income, 74 percent work full time—that is, the total work effort by all their members equaled or exceeded 35 hours weekly for 52 weeks a year.

For More Information

Tom Waldron, Brandon Roberts, and Andrew Reamer, Working Hard, Falling Short: America’s Working Families and the Pursuit of Economic Security (Baltimore: Annie E. Casey Foundation, October 2004), accessed online at www.aecf.org/initiatives/jobsinitiative/workingpoor/working_hard_new.pdf on Dec. 21, 2004.