Nearly 1 in 3 Working Families in U.S. Struggle to Meet Basic Needs

(January 2012) The slow recovery from the recession has fallen hard on America’s working poor families, increasing their numbers by 125,000 in 2010 to more than 10 million families, according to a new analysis of U.S. Census Bureau data.

The new data show a wide income gap between low-income working families and the nation’s wealthiest working families. Between 2007 and 2010, the share of working families who are low-income (below 200 percent of the official poverty threshold) increased from 28 percent to 31 percent, according to Overlooked and Underpaid: Low-Income Working Families Increases to 10.2 Million, published by the Working Poor Families Project.

The Working Poor Families Project, a national initiative supported by the Annie E. Casey, Ford, Joyce, and C.S. Mott foundations, has analyzed the conditions of American working families for the past decade. This latest analysis shows that the 18-month recession that began in December 2007 has dramatically exacerbated the problem, creating even greater challenges for working families striving for economic mobility and security.

“Unemployment remains stubbornly high during this period of slow economic growth, and millions of Americans remain out of work,” said Brandon Roberts, co-author and Working Poor Families Project manager. “Despite working hard, nearly one in three working families are struggling to meet basic needs,” he said. “In America we assume that work pays, but for these families, jobs are not providing the rewards necessary to get by, much less build any economic security.”

Mark Mather, a co-author and PRB associate vice president of Domestic Programs, noted that “many of these families used to be solidly middle class but have seen their incomes drop below the low-income threshold because of a pay cut, a reduction in hours, or because a spouse lost their job.”

• Forty-six million people, including 23 million children, lived in low-income working families in 2010—an increase of 1.6 million people from the previous year. The number of children in low-income working families increased by more than 500,000 in just one year.
• Minority families are far more likely to be low-income. In 2010, 44 percent of working families with at least one minority parent were low-income, twice the proportion of white working families.
• Between 2009 and 2010, the total number of working families dropped by nearly 800,000, as many workers lost their jobs or left the labor force. During the same period, the number of families who were working, but low-income, grew significantly.
• There are 21 states—mostly in the South and West—where a third or more of all working families are low-income (see table). California, Florida, and Texas have the largest number of low-income working families.
• The richest 20 percent of working families take home nearly half (47 percent) of all income. In 2010, those at the top of the economic ladder earned nearly 10 times the income of those at the bottom.
• In 2010, the majority of low-income working families (62 percent) spent more than a third of their income on housing, exceeding an accepted guideline for what constitutes affordable housing.

“This ongoing growth in the number of working families who earn too little to achieve economic security should be a wake-up call to policymakers,” said Deborah Povich, Working Poor Families Project manager and co-author. These families need access to educational opportunities that provide the degrees and credentials that lead to better jobs.”

The analysis, among other things, recommends that state and federal policymakers expand the number of working adults who enroll and succeed in education and skills development programs, and calls for an improvement in wages, benefits and supports for low-income working families.

Working Families Below 200 Percent of Poverty, Ranked by State, 2010

Notes: In 2010, 200 percent of the poverty line for a family of four with two children was $44,470. Definition of family: a married couple or single-parent with at least one co-resident child younger than 18 years old. Definition of a working family: all family members ages 15 and older either have a combined work effort of 39 weeks or more in the prior 12 months, or all family members ages 15 and older have a combined work effort of 26 to 39 weeks in the prior 12 months and one currently unemployed parent looked for work in the prior four weeks.
Source: U.S. Census Bureau, American Community Survey.