One Third of US Working Families Live in Poverty

The economy has begun to improve, but the benefits continue to elude many US workers and their families.

The number of families living at the poverty level has increased steadily since the recession began five years ago. This constitutes a double hit as these people were often the first to feel the affects of the financial crisis but may be the last to realize any increase in lifestyle.

The problem is that the jobs being created are often part-time and minimum wage, meaning that it is difficult if not impossible to garner enough income to support a family. Even with two jobs or four jobs (in a two-parent household), the related cost of child care can wipe out any hoped-for gains. In addition, the rising demand for rental housing has increased the cost of rents at a time when such families are particularly vulnerable.

It has long been understood that the deleterious affect of offshoring better-paying jobs would be reflected in these sorts of statistics. The impact on business remains significant. In a consumer-driven economy, where upwards of 70 percent of GDP may be the result of consumer spending, the decimation of the middle class and impoverishment of the working class means that the income available for the purchase of necessities has declined to the point where choosing lower cost alternatives is required. Discretionary purchases, even modest ones, have become insupportable.

Ultimately this system is unsustainable. There may well be a lag effect, meaning that incomes will eventually rise. But according to economists and regulators, the failure to rein in the behaviors that led to abuses of the financial system probably means that another crisis is inevitable. Which may hit just as those hoped-for lag effects begin to appear. As the data suggest, until working families are able to benefit from the economy in a meaningful way, the US will continue to struggle - as will the other global economies dependent upon it. JL

Susan Heavey reports in Reuters:

The number of U.S. families struggling with poverty despite parents being employed continued to grow in 2011 as more people returned to work but mostly at lower-paying service jobs, an analysis released on shows.

More working parents have taken jobs as cashiers, maids, waiters and other low-wage jobs in fast growing sectors that offer fewer hours and benefits The result is 200,000 more such working families - the so-called "working poor" - emerged in 2011 than in 2010, according to the report, based on analysis of the most recent U.S. Census Bureau data.

About 10.4 million such families - or 47.5 million Americans - now live near poverty, defined as earning less than 200 percent of the official poverty rate, which is $22,811 for a family of four.

Overall, nearly one-third of working families now struggle, up from 31 percent in 2010 and 28 percent in 2007, when the recession began, according to the analysis.

"Although many people are returning to work, they are often taking jobs with lower wages and less job security, compared with the middle-class jobs they held before the economic downturn," the report said.

"This means that nearly a third of all working families ... may not have enough money to meet basic needs."

The findings come three years after the nation's recession officially ended in the second half of 2009.

Brandon Roberts, co-author of the report, said the results were somewhat of a surprise after Census officials last year said the U.S. poverty rate had stabilized.

"As the economy has improved one would expect that the benefits of that improvement would to some extent tie to these low-income families, and we'd see a decrease or at least a stabilization in the numbers," said Roberts, whose project is funded by four groups, including the Annie E. Casey Foundation and the Ford Foundation, and focuses on state policies.

"But the reality, the data show that the benefits of - even though it's modest economic growth - it's not going to these low-income families," he added.

The group's analysis adds to the body of data focused on the slipping U.S. middle class even as there are signs of the nation's economy slowly coming back to life with improvements in the housing sector and lower unemployment rate.

For some Americans, the comeback has yet to begin.

Data showed that the top 20 percent of Americans received 48 percent of all income while those in the bottom 20 percent got less than 5 percent, the report said.

The analysis also found regional differences.

States in the South, such as Georgia and South Carolina, and those in the West, such as Arizona and Nevada, had the greatest increase in the number of working poor. The increase was slower in the Mid-Atlantic and Northeast.

"It's important to draw attention to the fact that there are real families behind those statistics," said Alan Essig, who heads the Georgia Budget and Policy Institute, adding that his state is still struggling with housing and unemployment.

IMPACT ON CHILDREN

The effect of near poverty on the growing number of U.S. children living in such families - an increase of 2.5 million youths over five years - is also a concern.

In 2011, roughly 23.5 million, or 37 percent, of U.S. children lived in working poor families compared with about 21 million, or 33 percent, in 2007, the report said.

Part of the problem is that more parents are working in service-sector jobs that require long hours at night and on weekends and so face child-care difficulties, along with low wages and involuntary part-time status, the analysis showed.

About 25 percent of low-income parents work in one of eight jobs: cashiers, cooks, health aides, janitors, maids, retail clerks, waiters and waitresses, and drivers, it said.

Such jobs often pay minimum wage, which can vary state-by-state, although the U.S. federal minimum wage standard has stood at $7.25 an hour since 2010.

"Any little thing - a child getting sick, a car breaking down ... those are quite significant events for these working families," Roberts said.

Focusing on state policies to boost education and jobs training for their parents could help, the report concluded. Others have also pointed to other options such as greater access to paid sick leave and increased minimum wages.

"Folks in our state are working hard, but for many families, working hard just isn't enough. Things need to change," said F. Scott McCown of the Texas-based Center for Public Policy Priorities.

Roberts said some federal policies in the recent agreement averting the so-called fiscal cliff were good news. The law that avoided higher taxes and across-the-board cuts kept two key tax credits and extended unemployment benefits.

He said the recent agreement to avoid higher U.S. taxes and across-the-board cuts helped by keeping two key tax credits and unemployment benefits. But those policies were in place in 2011, when Census gathered its data.

"Even despite those policies ... these families were struggling," he said.