Insights & Analyses
- Nationally, in 2020, 24 percent of Latino full-time workers had family income 200 percent below the poverty line compared to 9 percent of white full-time workers.
- Latinx workers, especially men, consistently have the highest rates of working poverty among all groups. Since 1990 the share of Latino men who are working poor has only slightly decreased from 22 to 20 percent.
- US-born black people are more likely to be working poor than US-born and immigrant white people.
- Among states, Mississippi and Arkansas have the highest percentage of working poor at 15 percent and 14 percent respectively, while Massachusetts and the District of Columbia have the lowest percentage at 4 percent.
Drivers of Inequity
Wages on the lower end of the wage distribution are stagnant, causing a rise in the number of people who are working yet still struggling economically. Shifts in the U.S. economy, such as corporate outsourcing to countries with lower wages, employer consolidation, and declines in union membership, are driving this stagnation. Federal policy choices, such as fiscal austerity and a minimum wage that has not been raised since 2009, also contribute to the rise in working poor. These shifts disproportionately impact women and people of color because they are overrepresented in low-paying jobs as a result of historical factors such as racial segregation and policies that banned women and people of color from accessing education and higher paid professions. Ongoing factors, like discriminatory hiring practices, lack of affordable childcare, and disparities in generational wealth, also contribute to working poverty.
Strategies
Grow an equitable economy: Policies to ensure full-time workers are economically secure
- Expand the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), which are responsible for lifting millions of families and children out of poverty each year.
- Raise the floor on low-wage work by increasing the minimum wage or enacting living-wage laws
- End wage theft and strengthen workers' rights to organize.
- Require paid sick days and fair scheduling.
- Provide high-quality preschool for low-income children and increase access to affordable childcare.
- At the federal level, institute a federal jobs guarantee, dedicate 1 percent of infrastructure investments to a fund for inclusive job and contracting supports, enact a $15/hour minimum wage for all workers, require paid sick leave and family leave for all workers, and guarantee workers’ right to organize at scale.
Strategy in Action
Stockton boosts incomes through unconditional cash payments. Through the Stockton Economic Empowerment Demonstration (SEED), 125 residents in neighborhoods in Stockton, California, in which the median household income is at or below $46,000 began receiving a monthly, unconditional $500 payment for 18 months. Stockton is a diverse, high-poverty city that often experiences a higher unemployment rate than the rest of the state. Throughout the project, researchers are collecting data on who is participating, how they spend their money, and how the additional income is affecting their lives. While critics argued recipients would spend the cash on addictive substances and luxury items, researchers announced that, so far, about 40 percent of payment funds have gone to food, 25 percent to merchandise, and 12 percent to utilities. The remainder of the study's findings will likely be announced in 2021 after the pilot is completed. Learn more.
Resources
Reports: How COVID-19 Is Affecting Black and Latino Families’ Employment and Financial Well-Being; Causes of Wage Stagnation; A State Agenda for America’s Workers; When Workers Don't Get Paid What They're Owed – And What Congress Can Do About It; Raising America's Pay
- Data: Opportunity Insights Economic Tracker (Low-Income Earnings); State of Working America; Living Wage Calculator; Family Budget Calculator; The Unequal States of America: Income Inequality in the United States; The Opportunity Atlas
