Working poor
Encyclopedia
Definition in the United States
There are several popular definitions of "working poor" in the United States. According to the US Department of Labor, the working poor "are persons who spent at least 27 weeks [in the past year] in the labor force (that is, working or looking for work), but whose incomes fell below the official poverty level." The poverty threshold (the poverty line) is calculated based on the age and number of people living in a given household. In other words, the poverty line is different for individuals and families, and for people over and under the age of 65. Click here for a breakdown of the US Census Bureau's poverty thresholds for 2009.We might also define the working poor as minimum wage workers. This is not a perfect categorization, as many minimum wage workers are young people from middle class families or spouses of higher earning individuals. However, many minimum wage workers are the main breadwinners for their household [statistic needed]. In addition, many minimum wage jobs are part-time jobs [evidence needed]. Thus, it is easy to see how a sizable portion of the working poor is made up of minimum wage workers [speculative reasoning]. Thinking of the working poor as minimum wage workers can help us envision the kinds of jobs typically held by the working poor [unverifiable statement]. For instance, food service workers, non-unionized retail workers, and janitors are often part of the working poor.
Definition in Europe
In the European Union a person is working poor depending on his revenues compared to a relative poverty level. Eurostat defines this level at 60 percent of the median income. The minimum wageMinimum wage
A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
can also be used as the threshold.
Definitions elsewhere in the World
There are various issues to consider when studying the extent, cause and definition of "working poor" and "working poor" conditions. One such issue is the definition of povertyPoverty
Poverty is the lack of a certain amount of material possessions or money. Absolute poverty or destitution is inability to afford basic human needs, which commonly includes clean and fresh water, nutrition, health care, education, clothing and shelter. About 1.7 billion people are estimated to live...
. Given on a global scale, the definition and requisites to be considered impoverished or in poverty
Poverty
Poverty is the lack of a certain amount of material possessions or money. Absolute poverty or destitution is inability to afford basic human needs, which commonly includes clean and fresh water, nutrition, health care, education, clothing and shelter. About 1.7 billion people are estimated to live...
may sharply contrast the conditions of any one specific country. When viewed at a high level, the global definitions of poverty are typically much lower than that of more prosperous countries. In areas such as the United States, England, France and other more prosperous nations, the poverty line is much higher than that of countries with typically lower or even negative economic conditions. When considering localized differences, such as in the United States, differences in market rates of goods and services may impact the effects of poverty.
Yet another consideration to be made with a global view is data collection and reporting methods. With no globally accepted standards on data recording and reporting, variances may be obscured, omit or inflate specific factors considered in determining poverty
Poverty
Poverty is the lack of a certain amount of material possessions or money. Absolute poverty or destitution is inability to afford basic human needs, which commonly includes clean and fresh water, nutrition, health care, education, clothing and shelter. About 1.7 billion people are estimated to live...
levels or measures of the working poor.
In some rural and agrarian societies it is possible to live on "less than a dollar per day" of income, and yet fall outside the definition of working poor or wage slave, if there are no property tax
Property tax
A property tax is an ad valorem levy on the value of property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state or a municipality...
es and the people can grow their own food, make their own clothing, build homes from materials they grow and harvest themselves, and generally make do with what nature provides to them directly. These people can live what they see as a close-knit and comfortable life, and they do not have a reliance on technological services that are considered essential in other cultures, such as health care, cell phones, electricity, postal service, etc.
In cities and other densely populated areas, growing or making all of what is needed is harder to achieve, and land availability may be limited, so totally self-sustaining living is difficult, requiring rental of property, purchase of food and services, and working for someone else to pay for these needs.
Working poor in the United States
The nature and extent of the working poor in the United States is a contested subject; while both sides of the political spectrum acknowledge that there are non-negligible numbers of working people living near or below the poverty line, there is disagreement as to whether or not this reflects a genuine flaw with current economic policy, and what the response should be.In the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, according to the government Bureau of Labor Statistics
Bureau of Labor Statistics
The Bureau of Labor Statistics is a unit of the United States Department of Labor. It is the principal fact-finding agency for the U.S. government in the broad field of labor economics and statistics. The BLS is a governmental statistical agency that collects, processes, analyzes, and...
, there were 6.4 million working poor in 2000; by 2003 the number had grown. In 2004, Business Week suggested that "the share of the workforce earning subpoverty pay [is] 24% [in 2003]".
Different numbers were found by The Working Poor Families Project, a national initiative that examines the conditions of working families both nationally and at the state level. In 2005, using U.S. Census American Community Survey data, the project found that 2.8 million working families are poor (earn less than 100% of poverty) and that these families constituted 12.2 million people. In addition, 9.6 million, or more than 1 out 4 working families in America (29%), are low-income, earning less than 200% of poverty. The 200% of poverty threshold
Poverty threshold
The poverty threshold, or poverty line, is the minimum level of income deemed necessary to achieve an adequate standard of living in a given country...
is considered a reasonable estimate of the amount of earnings needed to be economically self-sufficient ($39,942 for a family of four in 2005). Among states, the range for low-income working families extends from 15% (New Hampshire) to 42% (New Mexico).
The question of the working poor, how many there are and the reasons for their situation, remains controversial. For example, conservative commentator Thomas Sowell claimed that "census data show that most people who are working are not poor and most people who are poor are not working", and that workers who were part-time or under the age of 25 should not be counted as working poor.
Possible problems faced by the working poor
Workers without marketable skills may face low wageWage
A wage is a compensation, usually financial, received by workers in exchange for their labor.Compensation in terms of wages is given to workers and compensation in terms of salary is given to employees...
s, potential economic exploitation
Exploitation
This article discusses the term exploitation in the meaning of using something in an unjust or cruel manner.- As unjust benefit :In political economy, economics, and sociology, exploitation involves a persistent social relationship in which certain persons are being mistreated or unfairly used for...
, unpleasant working conditions, and few opportunities to attain skills that would allow them to escape their personal and economic situations. Unexpected costs (such as medical or repair costs) can substantially decrease the economic ability of the working poor to manage their lives.
In some cases, members of the working poor hold one or more part-time jobs, which require nearly full-time commitment but are classified as "part time". In this situation some benefits, like medical insurance, are not paid by employers. This situation is sometimes referred to as precarious employment
Precarious work
Precarious work is a term used to describe non-standard employment which is poorly paid, insecure, unprotected, and cannot support a household. In recent decades there has been a dramatic increase in precarious work due to such factors as: globalization, the shift from the manufacturing sector to...
. These workers are more often than not without adequate (or in many cases any) health insurance.
A common expression of working poor conditions states that such individuals often live from "paycheck to paycheck".
Policy responses
Many governments have initiated programs with the proclaimed intention of assisting those who may be considered impoverished or working poor. Much debate is centered upon the efficacy of such programs.In the United States, fiscal conservatives
Fiscal conservatism
Fiscal conservatism is a political term used to describe a fiscal policy that advocates avoiding deficit spending. Fiscal conservatives often consider reduction of overall government spending and national debt as well as ensuring balanced budget of paramount importance...
often argue in favor of the approaches recommended by Supply-side economics
Supply-side economics
Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created by lowering barriers for people to produce goods and services, such as lowering income tax and capital gains tax rates, and by allowing greater flexibility by reducing...
, in which stimulation of the investment sector is thought to lead to increased job opportunities and a better economy. Examples of conservative measures include lowering tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
es and reducing governmental regulation of business and trade. Fiscal progressives tend toward a more direct approach, usually with increased taxes and regulation. The government funds social welfare programs like food stamps and vouchers, subsidized housing, meal plans, and healthcare, and regulating wages, or by helping the working poor become more competitive in the labor market, through such measures as job training programs, low-interest student loans, and small business loans.
See also
- Basic incomeBasic incomeA basic income guarantee is a proposed system of social security, that regularly provides each citizen with a sum of money. In contrast to income redistribution between nations themselves, the phrase basic income defines payments to individuals rather than households, groups, or nations, in order...
- Minimum wageMinimum wageA minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
- Labor law
- Living wageLiving wageIn public policy, a living wage is the minimum hourly income necessary for a worker to meet basic needs . These needs include shelter and other incidentals such as clothing and nutrition...
- Income disparityIncome disparityThe gender pay gap is the difference between male and female earnings expressed as a percentage of male earnings, according to the OECD. The European Commission defines it as the average difference between men’s and women’s hourly earnings...
- Wage slaveryWage slaveryWage slavery refers to a situation where a person's livelihood depends on wages, especially when the dependence is total and immediate. It is a negatively connoted term used to draw an analogy between slavery and wage labor, and to highlight similarities between owning and employing a person...
- PovertyPovertyPoverty is the lack of a certain amount of material possessions or money. Absolute poverty or destitution is inability to afford basic human needs, which commonly includes clean and fresh water, nutrition, health care, education, clothing and shelter. About 1.7 billion people are estimated to live...
- Welfare trapWelfare trapThe welfare trap theory asserts that taxation and welfare systems can jointly contribute to keep people on social insurance because the withdrawal of means tested benefits that comes with entering low-paid work causes there to be no significant increase in total income...
- Wealth condensation
- Lucky duckiesLucky duckiesLucky duckies is a term that was used in Wall Street Journal editorials starting on 20 November 2002 to refer to Americans who pay no federal income tax because they are at an income level that is below the tax line...
- Nickel and DimedNickel and DimedNickel and Dimed: On Getting By in America is a book written by Barbara Ehrenreich. Written from the perspective of the undercover journalist, it sets out to investigate the impact of the 1996 welfare reform act on the "working poor" in the United States...
- Precarious workPrecarious workPrecarious work is a term used to describe non-standard employment which is poorly paid, insecure, unprotected, and cannot support a household. In recent decades there has been a dramatic increase in precarious work due to such factors as: globalization, the shift from the manufacturing sector to...
- SweatshopSweatshopSweatshop is a negatively connoted term for any working environment considered to be unacceptably difficult or dangerous. Sweatshop workers often work long hours for very low pay, regardless of laws mandating overtime pay or a minimum wage. Child labour laws may be violated. Sweatshops may have...