As Congress and the president wrangled over fiscal cliff issues the past few months – particularly taxes on the wealthy – new and discouraging data emerged about the reality facing those at the lower end of the income ladder. Coping with a downbeat job market, stagnant wages, and declining benefits, the number of low-income working families continues to grow.
The American Dream is premised on the notion that work will support a family and lead to economic security, but that dream is not a reality for tens of millions of Americans who continue to fall farther behind the wealthiest Americans. And while these trends pose immediate threats to family well being, they pose even greater, long-term threats to children.
Today, nearly a third of all working families can be considered low-income—defined as earning less than twice the federal poverty income threshold. These are families that have a working adult but still don’t make a family-sustaining income. In many cases, they struggle to make ends meet.
An analysis of the most recent Census American Community Survey data by the Working Poor Families Project (WPFP) found that the number of these low-income working families increased by 200,000 to 10.4 million in 2011 over the prior year. Those 10.4 million families constitute 32 percent of all working families – up from 28 percent in 2007 – and represent 47.5 million Americans who are committed to work but aren’t reaping adequate rewards.
In 2011, the top 20 percent of working families earned 10.1 times the total income earned by the bottom 20 percent, up from 9.5 times in 2007. Stated another way, the top 20 percent took home 48 percent of all income while those in the bottom 20 percent received less than five percent of the economic pie.
We know from our state partners around the country that many Americans are determined to work to support their families but they are stuck with jobs with inadequate pay. Too often they can find only part-time work that comes without critically important benefits. While jobs open up for such occupations as cashier or health aide, many better-paying jobs – such as those for construction workers, machine operators, or even pharmacy aides – have declined in recent years.
These numbers alone are powerful, but they also have serious implications for children in low-income working families.
Overall, the proportion of children in working families that are low-income increased from 33 percent in 2007 to 37 percent in 2011. In 2011, there were 23.5 million children in low-income working families.
These numbers matter because, on average, children growing up in low-income families have worse health and educational outcomes than kids in more affluent families. Children from these low-income working families are likely to lead more economically insecure lives as adults. They will have dimmer prospects for obtaining an advanced education and the skills needed to gain full-time employment in good-paying jobs.
In other words, the factors fueling the expanding income gap will continue to negatively affect the generation to come, as many of the children living in those families today will end up living lives without economic security.
This growth in the number of struggling working families stems from ongoing changes to the economy, to be sure, but it also underscores the failure by policymakers to take adequate steps to support working families and improve the quality of jobs.
Congress took an important step earlier this month by extending unemployment benefits, the federal Earned Income Tax Credit (EITC), and the child credit, which bolster the incomes of working people in lower-paying jobs. But state legislatures should continue to support – and expand – their own EITCs and similar credits. We should also protect and increase funding for Pell Grants and other educational and skill development programs designed to give workers the tools they need to advance in the workforce. Finally, increases in the minimum wage at both the federal and state levels – and indexing the wage so it keeps up with the cost of living – will drive up income for workers and give them more economic security.
These are reasonable policy changes that would have a major impact on the well being of working families across the country and improve their opportunities to join the middle class. Boosting opportunities for these families leads to a stronger economy for all of us. It’s time we paid attention to the data.
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Brandon Roberts manages the Working Poor Families Project.
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