The Working Poor: Helping The Poor And Needy

Introduction

According to the US Census Bureau (2019), poverty is determined by the pre-tax income of a family with two adults and two children but does not include capital gains or noncash gains, such as food stamps, Medicaid or public housing. Many Americans believe that people who work throughout the year ought to have enough income to support their families. Poverty is often interpreted as a problem of insufficient workload or lack of employment opportunities. Thiede, Lichter, & Sanders (2015) mention that the long-term narrative of the 'American Dream' shows that hard work is the main determinant of upward social mobility. Public policies such as post-reformed benefits (e.g.Temporary Assistance for Needy Families [TANF]), the expansion of the Earned Income Tax Credit (EITC), and food stamp work requirements are often based on the assumption that individuals are encouraged to work or work more. Most poverty studies reinforce this notion by focusing on the employed and the unemployed poor. The unemployed in the United States are facing a very high risk of poverty, but historically, the so-called working poor accounted for a large part of the US population, and this population seems to have grown.

The Working Poor

The working poor means that working people whose income is below the specific poverty line usually have a minimum wage to work, or just above. According to the US Bureau of Labor Statistics (2019), the working poor are those who have spent at least 27 weeks or more a year in the labor force. These people either work or are looking for work, but whose income is still below the poverty line. In 2017, there are about 6.9 million people who were working poor. The ratio of working poor to all individuals in the labor force was 4.5%. There are some careers that usually encompass the working poor, such as cashier, chef, retail, sales, or waiter. The largest ethnic group among the working poor is African American and Hispanic or Latino, both accounting for 7.9%, with whites accounting for 3.9% and Asians accounting for 2.9%. Because their wages are low, the working poor may face a lot of obstacles. They have difficulty with saving money, keeping their jobs, and buying a house. Generally, they are not eligible for government assistance. Nearly half of American workers earn less than $15 an hour and one-third of American workers earn less than $12 an hour. In other words, even if people work full time, hourly wages are not enough to meet basic need

Main Factor

The increase in working poverty is partly due to changes in economic structure and policies. In the past few decades, companies have created disproportionately low-paying jobs, and with the exception of the highest-income earners, all other people's wages are flat. To make matters worse, the growing unemployment rate during the Great Depression further decreasing wages. For the working poor, it is not common to live in housing and employment for a long time (Boschmann, 2011). According to 'Being Working Poor or Feeling Working Poor? The Role of Work Intensity and Job Stability for Subjective Poverty' (2019), the working poor is a ubiquitous and disturbing phenomenon and proves that a job does not protect families from the risk of poverty. The results show that low job intensity and job instability are the key micro-determinants of the working poor. Besides, workers in poor families do not always feel poor. In some cases, non-poor workers feel that their needs are insufficient. They find that these differences do not depend on the intensity of the family's work but the job stability of family members. In terms of job instability, families who do not have workers or who have not signed a temporary contract are less likely to be poor. The fact that an individual judge the family's economic status based on actual monetary income and income stability will not only affect the current household consumption level but also affect the choice of fertility rate and investment in children's education.

Problems and Impacts

Children who grow up in the working poor have educational opportunities that are different from those of the middle class. In many cases, the children of working poor are less likely to continue to pursue higher education. Nowadays, university or college degrees are a requirement for many jobs, and low-skilled jobs usually only require high school education. Thence, young people who grow up in the working poor might continue to fall into a vicious circle of family poverty. Besides, in the current market, basic items such as health care, childcare, and housing are too expensive. This brings a series of interrelated problems to the family, such as a family may have to pay for the medical expenses without food. However, undernourishment may lead to other health problems. In order for families to earn a living, they either need to earn more than the family budget or need government support to fill the gap. Work is not enough. Many working poor must work in a variety of jobs to make a living but this may be exhausting and often leads to short-term and long-term health problems. In the article by Řimnáčová & Kajanová (2019), it mentions that despite the low wages, people of the working poor tend to continue working, just to avoid unemployment and risk of social exclusion. However, long-term low-income work creates pressure and causes more problems. Stress can affect sleep patterns and lead to problems related to food intake and nutrition, leading to gastrointestinal diseases. Cardiovascular and neurological diseases may also occur. Due to the lack of funds, the resulting data from this stress is statistically significant and can predict well the deterioration of mental conditions. The possibility of mental illness is also higher. All of these problems will affects the entire family, especially children.

Challenge

Employment and housing instability are a big challenge to the working poor. According to Desmond & Gershenson (2016), housing insecurity and employment insecurity are relatively urgent. In the private leasing market where most low-income families live, affordable housing has shrunk dramatically. From 1990 to 2006, the median monthly rent increased by 70%. In the past few years, at the bottom of the wage distribution, income growth has been much smaller. For decades, American workers have been in a state of stagnant wages, and since the last time Congress raised the minimum wage in 2009, the federal minimum wage has remained unchanged. Vargas (2016) mentions that for seven years, it has been fixed at a wage of $7.55 per hour: $290 per week and $15,000 per year. During that time, the cost of grocery increased by 25%. Rents have risen by more than 50%. At the same time, the number of new families receiving federal subsidies fell by an average of at least 3,000 between 1995 and 2007, compared with an average of 161,000 between 1981 and 1986. Today, only 25% of families are eligible for housing assistance. As a result of these changes, the rent burden of low-income families has soared. In 2013, most poor renters spent at least half of their income on housing costs, and nearly a quarter of them spent more than 70% on housing costs. They estimate that at least half of the US renters at the bottom of income distribution use at least half of their income for housing costs. Also, many low-income workers use most of their salaries for rent and utilities. The number of low- and middle-income working households that used more than half of their income for housing costs increased by 87% between 1997 and 2005. In 2010, one in four employed renters used more than half of their income for housing costs. It shows that housing costs have a huge impact on the poverty rate. Housing costs are becoming an increasingly important factor in determining the poverty rate among working families. Since the past, the poverty rate before the cost of housing with and without children has remained essentially unchanged. The poverty rate has increased significantly only after considering the cost of housing. Lack of affordable social housing, which directly puts families into poverty, causes low-income private tenants to face a gap between housing benefits and rents.