The Working Poor: A Booming Demographic

Average Wage among the Working Poor, 2000-2010

Former 2012 GOP presidential candidate Rick Santorum caught hell when he called President Obama a snob for wanting everyone to get a college education. But Santorum's words strike a discordant note that shouldn't be ignored. The president's frequent exhortations that everyone should go to college in order to achieve some level of economic success ignore this fact about the U.S. labor market: that now and into the next decade, more than two-thirds of the jobs that U.S. workers will depend on to earn their livelihoods will be non-college-degree jobs. Intentionally or not, Obama's words suggest that workers without a high level of educational credentials should expect less. Such a view feels out of touch at best, and elitist at worst.

For the large majority of workers, the key to avoiding—or escaping—the ranks of the working poor will necessarily rely less on whether they have any post-secondary education and more on whether jobs that require no college experience pay decent wages. To get serious about reducing the number of the working poor we must eliminate poverty wages. Without doing so, a large share of future jobs will offer little more.

Defining the Working Poor

The most widely recognized definition of poverty—the U.S. Census Bureau's official poverty line—has been widely criticized as too low because it represents an exceedingly severe level of economic deprivation. Income eligibility guidelines for major anti-poverty policies demonstrate the inadequacy of the official federal poverty line (FPL). Public subsidy programs such as free and reduced-price school lunches, the State Children's Health Insurance Program (SCHIP), the Low Income Home Energy Assistance Program (LIHEAP), and the Earned Income Tax Credit (EITC) provide benefits to households with incomes up to about twice the poverty line.¹ According to these programs, families at twice the poverty line live with a high enough level of economic distress to warrant government aid.

The Economic Policy Institute has an alternative measure of a minimally decent living standard for families with young children, called the "Basic Family Budget."² These budgets include: food, clothing, housing, transportation, child care, health care, other necessities (including personal care items), and taxes. These budgets do not allow for any savings—not for retirement, education, or even for emergencies. This Basic Family Budget typically ranges between two and four times the official poverty line, depending on local living costs, and averages at about 2.4.³ In other words, for the typical family with children, an income level below 240 percent of the FPL would not be enough to meet their basic needs.

For these reasons, I define the poor as those living in households with annual incomes at 2.4 times the official poverty line or less. The working poor are those who have been active in the workforce at some point in the year—either by working or looking for work.

Who constitutes the working poor? There are no surprises here. People of color—African Americans and Latinos, in particular—are over-represented. African-Americans made up 11.8 percent of the workforce in 2010, but 17.5 percent of the workers whose family incomes did not cover their basic needs.⁴ The figures for Latinos are more dramatic: Latinos made up 25.6 percent of poor workers, even though they only constitute 14.8 percent of all workers.

Educational credentials matter a lot too—not because available jobs require high levels of education, as I will demonstrate later, but because high-school-degree jobs pay less. The share of those with a high school degree or less is about nineteen percentage points greater among the working poor compared to the overall workforce (57.3 percent versus 37.8 percent).

The working poor are also somewhat younger than workers more generally, with an average age of thirty-seven compared to forty-one for the overall workforce. Women and men, on the other hand, appear among the working poor in...