Insights & Analyses
- Nationally, in 2022, 20 percent of Latinx full-time workers had a family income below 200 percent of the poverty line, the highest among all racial and ethnic groups.
- Latinx workers, especially men, consistently had the highest rates of working poverty among all groups. However, the share of Latino men who worked full-time yet had family income below 200 percent of the poverty line decreased from 29 percent in 1990 to 21 percent in 2022.
- Full-time immigrant workers were generally more likely to be working poor than their US-born counterparts. However, Black immigrant workers were less likely than their US-born counterparts to be working poor.
- In 2022, Mississippi and Arkansas had the highest percentages of working poor at 19 percent and 17 percent respectively, while Massachusetts, New Hampshire, and the District of Columbia had the lowest percentages at 4 to 5 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 protect against predatory, high-cost financial service providers.
- Make the temporary expansion of the Child Tax Credit (CTC), which was part of Covid-19 federal stimulus spending, permanent.
- Raise the floor on low-wage work by increasing the minimum wage or enacting living-wage laws, requiring paid sick days, ending wage theft, strengthening workers' rights to organize, and ensuring fair scheduling.
- Expand access to high-quality public education, create cradle-to-career pipelines for vulnerable youth, increase access to affordable childcare, and invest in universal pre-K.
- At the federal level, institute a federal jobs guarantee, dedicate 1 percent of infrastructure investments to a fund for inclusive job and contracting supports, increase the tax rate on capital gains and dividend income, and enforce corporate tax responsibilities by eliminating tax loopholes.
Strategy in Action
Stockton boosts incomes through unconditional cash payments. Through the Stockton Economic Empowerment Demonstration (SEED), launched in 2019, 125 residents in neighborhoods in Stockton, California received a monthly, unconditional $500 payment for 24 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 collected data on who is participating, how they spent their money, and how the additional income affected their lives. While critics argued recipients would spend the cash on addictive substances and luxury items, in the first year of the program about 40 percent of payment funds went to food, 25 percent to merchandise, and 12 percent to utilities. Following the conclusion of the program, participants reported that the funds reduced their financial volatility and mental distress, helped with their energy and physical health, and gave them greater agency to pursue professional or personal goals. Learn more.
Resources
Reports: A State Agenda for America's Workers; A Profile of the Working Poor, 2022; More than $1.5 billion in stolen wages recovered for workers between 2021 and 2023; How family sustaining jobs can power an inclusive recovery in America’s regional economies; The Working Poor: Lack of Job Quality Increases Poverty Rates; Wage inequality fell in 2023 amid a strong labor market, bucking long-term trends; The Productivity-Pay Gap; The Working Poor in California
- Data: Opportunity Insights Economic Tracker; State of Working America; Living Wage Calculator; Family Budget Calculator; The Opportunity Atlas; The Self Sufficiency Standard