A third of working families struggle with basic needs

Contact: Judy Putnam at 517.487.5436

The number of low-income working families in Michigan continues to increase
Michigan ranks 26th in the number of low-income working families

[WASHINGTON, D.C.] – The number of low-income working families continues to grow, with nearly a third of all working families in the United States now struggling to earn enough money to meet basic needs, a new report by the Working Poor Families Project shows. In Michigan, the data found there were 308,000 low-income working families in 2011, representing 32 percent of the total 966,000 working families, up from 27 percent in 2007. The state ranks 26th in the nation in the percent of low-income working families.

“Despite certain economic indicators showing that the economy is slowly improving, there are still more than 300,000 low-income working families here in Michigan who are not feeling any economic uptick,” said Gilda Jacobs, president and CEO, Michigan League for Public Policy. “Our state is one of ten across the country where the share of low-income working families has increased by more than 5 percent since 2007. Clearly, more legislative action is needed to ensure that Michigan’s vulnerable populations have access to the programs and educational opportunities that will allow them to get ahead – which will better allow our state to get ahead.”

Nationally, the number of low-income working families – sometimes called the working poor – increased by 200,000 to 10.4 million in 2011 over the prior year, according to the WPFP analysis of new Census Bureau data. Those 10.4 million families constitute 32 percent of all working families – up from 28 percent in 2007 – and represent 47.5 million Americans.

At the same time, nationally the economic gap between high-income and low-income working families continues to widen. In 2011, the top 20 percent of working families earned 10.1 times the total income earned by the bottom 20 percent, up from 9.5 times in 2007. Stated another way, the top 20 percent took home 48 percent of all income while those in the bottom 20 percent received less than 5 percent of the economic pie.

While the increase in low-income working families has been uneven geographically, the analysis shows that every state has a significant proportion of working families that are low income, with the highest percentages found in states in the South and West.

Nationally, with unemployment remaining high, a large number of low-income families are challenged to find full-time, good paying jobs. The analysis found, though, that more than seven out of 10 low-income families were working in 2011; despite working many of these families simply don’t earn enough money to pay for basic living expenses. Family budgets were impacted by high transportation and child care costs at a time when often the only jobs that could be found tended to be in eight occupations that do not pay wages adequate for supporting a family – including cashier, cook and health aide.

Making matters worse, many occupations that provided better wages such as carpenter or painter have seen their jobs disappear, and many people seeking work have been unable to find full-time employment.

“Clearly there have been positive signs over the past two years that the broad economy is improving, but the gains are not helping these low-income working families,” said Brandon Roberts, who co-authored the analysis. “The American dream is premised on the ability of families to better themselves through hard work. Yet as this data shows, today’s working families clearly face a more challenging situation than those in the past.”

The WPFP research shows that the growth in the number of low-income working families is increasingly affecting children. Overall, the proportion of children in working families that are low-income increased from 33 percent in 2007 to 37 percent in 2011. In 2011, there were 23.5 million children in low-income working families.

The latest research is based on new 2011 data from the Census Bureau’s American Community Survey. The category of low-income working families is defined as those earning less than 200 percent of the official poverty threshold. The poverty threshold in 2011 for a family of four with two children was $22,811.

The new census data also revealed these findings:

  • In 2011, about 29 percent of low-income working families included a parent who did not graduate from high school.
  • Low-income working families are disproportionately headed by minorities. In 2011, 42 percent of all working families had at least one minority parent but among low-income working families, the number jumped to 59 percent.
  • 61 percent of low-income working families have a high housing cost burden—defined as spending more than 33 percent of household income on housing costs such as mortgage or rent payments, utility costs, and other expenses.

The new report points out that policy decisions in Washington, D.C., and state capitals have important implications for low-income working families. For example, cuts to education funding have also made it harder for low-income working families to improve their economic prospects. Significant reductions in state investments in two and four-year colleges have led to increases in student tuition and fees, making postsecondary education less affordable. Similarly, potential cuts in federal Pell Grants would make it harder for many low-income students to attend college.

The Michigan League for Public Policy, formerly the Michigan League for Human Services, is a nonpartisan, nonprofit research and advocacy organization dedicated to economic opportunity fo all.