THE WORKING POOR AND THEIR FUTURE

by Allan Lichtenstein

 

I HAVE BEEN READING Sinclair Lewis’ 1935 novel, It Can’t Happen Here. Early in the book, Doremus Jessop, the lead character, stops for gasoline at a garage at which Karl Pascal works. Pascal remarks: “[W]hat burns me up is the fact that even before this Depression, in what you folks called prosperous times, 7 per cent of all the families in the country earned $500 a year or less — remember, those weren’t the unemployed, on relief; those were the guys that had the honor of still doing honest labor.”

Given that I spend my working day doing applied poverty research, this was all too familiar.

I was reminded of this passage on a visit to the Whitney Museum, when the anonymity of the black-suited security men protecting the Alexander Calder sculptures triggered my attention. Invisible to the kind of highbrow attention the people flowing around them pay to the sculptures, they were walking back and forth, ensuring that the absorbed visitors do not breach the black lines in front of the sculptures. I asked one of them to tell me about his work conditions. He responded that his shifts run from 10am to 10pm, for which he is paid $11 an hour and receives no benefits.

Descending to the exhibition on the floor below heralding “the strength of collective man,” I read the caption introducing the exhibit. Quoting Franklin Delano Roosevelt, the inscription stated: “in our seeking for political and economic progress as a nation we all go up or else all go down as one people.”

The irony of the contradiction was all too powerful.

 

THE OFFSHORE DEALINGS of the world’s richest, just revealed in the “Paradise Papers,” and the brazen bias of the House Republicans’ tax bill, which would reward the undeserving rich, leaves me wondering how these museum guards who work diligently meet their daily needs living in New York City. For a country that is still committed to the view that work is the solution to reducing poverty, what does the future portend for workers in low-wage paying occupations?

Assuming a security guard works ten hours a day, five days a week and fifty-two weeks a year, he will earn an annual gross income of $28,600 at $11 an hour. According to federal poverty thresholds for 2016, his $28,600 income will be enough to keep him out of poverty if he lives alone, if he supports himself and another adult, or if he supports a household comprising two adults and two children under 18.

Federal poverty thresholds, however, hardly gauge the reality of living and raising a family in New York City. A 2014 report issued by the Federation of Protestant Welfare Agencies in New York City contends that at best this guard may just cover his basic needs if he lives alone in the Bronx. Using data developed by the Center for Women’s Welfare at the University of Washington, this report shows that a single adult living in South Manhattan would need as much as $48,520 (2014 dollars) to make ends meet, while a family of two adults, a preschooler and a school age child living in the Bronx needs $70,319 a year and as much as $98,836 in South Manhattan.

Estimates of the income a family needs to maintain “an adequate but modest living standard” free of deprivation have been developed by the Economic Policy Institute (EPI) for 618 U.S. communities and ten family types. Their estimates show that a basic family budget for a two-parent, two-child family ranges from $49,114 to $106,493 in 2014 dollars.

Both the “Self-Sufficiency Standard” developed by the Center for Women’s Welfare and the Economic Policy Institute’s “Family Budget Calculator” highlight the shortcomings of federal poverty thresholds as adequate measures of the incomes families need to meet their basic needs. Using even twice the federal poverty threshold as a measure of poverty would provide a conservative estimate of the income needed to make ends meet. For example, at 200 percent the federal poverty level, the poverty threshold in 2016 for a two-parent, two-child family was $48,678, considerably less than the $63,741 EPI has calculated as the nationwide median family budget needed by this family type in 2014 dollars.

The poverty wages of a Whitney Museum security guard would seem to contradict the seeming health of the American economy. In October, the number of unemployed nationwide dropped to 6.5 million, a low level last achieved sixteen years ago in 2001 (see figure 1). The number of employed workers meanwhile grows steadily, and now stands at almost 154 million.


Yet a sizeable working poor population still exists, demonstrating that work does not guarantee an escape from poverty. Although labor force poverty rates have declined slightly over the past five years, 30 million workers were living in 2016 in households with an income below 200 percent the Federal Poverty Level — a more reasonable but conservative assessment of the income needed to make ends meet nationwide, on average. Overall, the labor-force poverty rate was a substantial 18.5 percent in 2016 when measured at 200 percent the FPL.

Labor force poverty varies by the employment status of the worker — whether a worker is actively working as opposed to being unemployed. In fact, of the 30 million workers in the labor force who were living in households with an income below 200 percent the FPL in 2016, a little more than 25 million (83 percent) were working (see figure 2). A much smaller but sizeable number of workers who were also living in poverty were unemployed but looking for work — 2.9 million (about 10 percent) in 2016.

Not all workers are working full-time and year-round, of course, and it can be argued that it is reasonable to expect workers who are working part-time or part-year to fall into poverty. Labor force poverty certainly does vary by work experience, depending on whether a worker worked full-time, part-time, year-round, part-year or did not work in 2016. Yet almost half of the 30 million workers (about 13.1 million) worked full-time, year-round and still lived in households with an income below 200 percent the FPL (see figure 3).

Earning a poverty wage does not necessarily mean that a worker and her family is living in poverty. The worker may be living in a family or household where there is another wage earner and the family’s joint income is sufficient to keep them above the poverty threshold. The likelihood of a family living in poverty was recently estimated by the Government Accountability Office (GAO) at the bequest of Senator Bernie Sanders at three different hourly low-wage categories — when a worker earns less than the current federal minimum wage of $7.25 per hour, earning between $7.26 and $12 an hour, and earning between $12.01 and $16 an hour.

The GAO found poverty levels to be fairly consistent in each of the three low-wage categories among families of low-wage workers over the past twenty years. They estimated that 37 percent of all working families in the minimum-wage category lived below 200 percent the FPL in 2016. This actually increased to 40 percent of all families in the $7.26 to $12 wage category, while as much as 24 percent of all families earning between $12.01 and $16 per hour lived below 200 percent FPL.

 

POVERTY VARIED considerably by family type, while the presence of a child increased the likelihood of poverty in all three low-wage categories, regardless of the marital status of the low-wage worker. Single-parent families were most likely to be in poverty: Nationwide, 82 percent of single-parent families earning the minimum wage were living below 200 percent the FPL in 2016, and the likelihood of living with an income below 200 percent the FPL was still a sizeable 65 percent for single-parent families earning between $12.01 and $16 an hour.

The GAO report found that six occupational categories employed more than half of all low-wage workers: food preparation and serving, sales, office and administrative support, building grounds cleaning and maintenance, personal care and service, and transportation and materials moving. These six categories employed 59 percent of all workers earning the federal minimum wage or less, 62 percent of workers earning between $7.26 and $12, and 50 percent of the workers earning between $12.01 and $16.

Most of the occupations that employed more than one million workers in 2016 are included in these six occupational categories (see figure 4). Twenty of the 27 highest employing occupations paid an annual median wage that was less than the poverty threshold of $48,678 for a two-parent, two-child family in 2016.

 

The preponderance of poverty paying occupations among occupations employing the largest number of workers in 2016 begs the questions of what lies ahead. A recently released forecast by the Bureau of Labor Statistics projects more of the same ten years down the road.

The health care and social service sector is projected to have the most employment growth, while manufacturing will continue to shrink. As figure 5 shows, there is much overlap between the occupations in figure 4 and this figure. The occupations with the largest growth are the highest employing occupations today, most of which pay poverty wages.

Overall, job growth is expected to be greatest in the low-paying occupations that paid a median annual wage of less than $50,000 in 2016, and the high-paying occupations that paid a median annual wage of $80,000 or more — exacerbating the bifurcation of the society (see figure 6).

While the rich will get richer, the likelihood is high that museum guards and millions of other able-bodied diligent workers will still be earning poverty wages in the future. If and after they have met their basic needs, they will not have the $25 needed to buy an adult ticket to visit the Whitney Museum.

 

Allan Lichtenstein, our contributing writer, has a Ph.D. in urban planning from Rutgers University and has been working in the field of  poverty research for many years.