Contrary to many stereotypes of poor people being unwilling to work, nearly half of all poor families — 47.7 percent — have at least one adult worker in the household. While most of the emphasis of the ongoing debate over welfare reform has revolved around poor families who did not work, a major problem in Massachusetts — and in other states — is the prevalence of poverty despite work. Welfare reform that focuses only on families outside the work force will do nothing to improve the living standards of those who remain poor even though they work. Indeed, if welfare reform efforts work the way its proponents expect, it could — by moving thousands of low-skilled workers into the work force — drive down wages for those in the workforce already or push them out of jobs altogether.
Work Experience of Poor Families with Children
Many families in Massachusetts are poor in spite of their work efforts. Throughout the period analyzed in this report, the minimum wage was $4.25 per hour. At that rate, a full-time, year-round worker would earn just $8,840 a year, far below the poverty rate for a family of three throughout the 1990s.8 Thus it is not surprising that many poor families in Massachusetts are poor in spite of their work efforts. Excluding families who are unable to work because they are retired, ill, or disabled (just nine percent of all families with children), nearly half of all poor families with children — 45.2 percent — have at least one adult worker during the year.9 This means that there were 156,000 people living in families with children who were below the poverty line despite work. Of these poor people, 91,000 — or 58.3 percent — were children. (See Box below.)
PROFILE:Mary Brosnan Mary Brosnan is a 43 year old Cambridge resident who has been separated, though not divorced, from her husband for the past four years. She has three boys, ages 18, 15, and six. Debbie works three part-time jobs in bookkeeping and office management which she is able to schedule around her child care and child transportation responsibilities. She earns a total of $855 per month in the three jobs. She receives $75 per week in child support and $171 per month in food stamps; thus total cash available for this family of four is $13,200 a year. Mary has never been on AFDC. Her sister, a single mother of four children, received AFDC for a number of years and earned an associates degree during that time. Mary's sister is now working and no longer receives AFDC. Mary wonders whether she should have applied for AFDC, as she has been unable to pursue the accounting degree she sees as her future. Despite making regular small payments on an unpaid balance, Mary's youngest son has recently been refused by their family's dentist for recommended dental surgery. |
Thus poverty despite work in Massachusetts, while surely the exception, is not as rare as one might think. Fully 4.7 percent of all people who live in families with a worker are poor. That is, out of every 20 people in families with a worker, one will be poor. What do we know about the working poor?
For the most part, their work experience is significant. Among the 45 percent of poor families with a worker present, the average number of weeks worked by one parent alone or both parents combined is 38, the equivalent of nearly nine months of work (see Figure 8).
Of all poor families with children, 18.2 percent — nearly one in five — work at least 50 weeks during the year
Moreover, 10.1 percent of all poor families with children work at least 2,000 hours during the year, the equivalent of a 40 hour week over 50 weeks. Thus one out of every ten poor families is poor despite the fact that they work full-time, year-round.
Figure 8
Another way of understanding the work effort of the poor is to consider the share of families receiving welfare that also have a working parent. It is worth noting that not all families receiving welfare are poor by the official definition. That is, they may work for half the year, lose their job, exhaust unemployment benefits if they are eligible, and then start to receive public assistance. Their annual income could be above the official poverty line, even though they were poor for part of the year.
During the early 1990s, 105,000 families with children in which the parents were not retired, ill, or disabled received welfare cash assistance, either in the form of AFDC, SSI, or general relief. Of these families, an adult worker was present in 44,000, or 41.5 percent. Thus nearly half of all families on welfare who could be considered eligible to work do so — and this does not include those who would like to work but during the deep recession during much of the early 1990s were unable to find work.
Working poor families do not fit into any simple demographic categories. They are not just single parents or young families with limited work experience or simply adults with very limited education. On the contrary, the working poor come from a broad cross section of each state's residents.10
Even the presence of two potential workers does not guarantee an escape from poverty. Nearly half of all working poor families with children in Massachusetts — 43 percent — were married couples (see Figure 9).
Figure 9
Nearly all of the remaining working poor families were headed by women. Of all working poor families with children, 52 percent were single-parent families headed by women, while merely four percent of working poor families were single-parent families headed by men.
A large majority of working poor families with children were white. Figure 10 shows that two-thirds of working poor families with children were headed by non-Hispanic whites, while 19 percent were Hispanic, and 13 percent were non-Hispanic blacks.
As shown in Figure 11, less than a quarter of family heads in working poor families with children had less than a high school education. Nearly four in ten poor working families with children in Massachusetts had at least some college education, and more than one in seven had a four-year college degree.
Working poor families with children in Massachusetts are headed by people of all ages. As seen in Figure 12, one in ten such family heads are below the age of 25, while 41 percent are between 25 and 34 years old, another third is between 35 and 44, and 16 percent are over 45.
Finally, working poor families with children live in communities all across the state. While the prevalent belief may be that poor families are concentrated in large cities, nearly one in four poor families in Massachusetts live outside of metropolitan areas.11
Figure 10
Figure 11
Figure 12
Poverty Despite Work in the Population at Large
Among individuals and families without children, the prevalence of poverty despite work is even greater than in families with children. For instance, over half of poor individuals and families without children — 51.3 percent — have a worker present in the household; this accounted for some 62,000 people in Massachusetts in the early 1990s. Among these households with workers, the work experience is not trivial, with workers averaging 32 weeks of work per year. And fully 8,000 households — 7.4 percent of individuals and families without children — work full time, year round yet remain below the poverty line. All told, nearly one family in 20 where a worker is present — or 4.7 percent — lives below the poverty line.
The following data look at poverty in all Massachusetts households with at least one worker, whether or not there are children in the household.
As with poverty generally, the working poor are mostly white (see Figure 13). Non-Hispanic whites make up 71.7 percent of the working poor, while blacks make up 11.4 percent and Hispanics make up 14.2 percent.
Figure 13
Among whites in families with a worker, just 3.7 percent are poor, as seen in Figure 14. But among blacks in families with a worker, the poverty rate is more than three times higher, or 12.8 percent. And among Hispanics in families with a worker, the poverty rate is more than six times higher, or 22.7 percent.
Figure 14
Among Hispanic families with workers present, nearly one in four people live in poverty. Thus it would not be surprising if young Hispanic people, observing the prevalence of poverty despite work, were skeptical or even cynical of the value of work.
The work efforts of poor households is by no means trivial; in fact, in a large number of families, adults work at least 50 weeks during the year, yet remain below the poverty line.
In 17.3 percent of poor households in Massachusetts, the combined work effort of the household head and any other adults in the family is at least 50 weeks during the year.
In about half of those households, 8.5 percent of all poor households, the combined work effort of adults is at least 2,000 hours. Thus in more than one in 12 poor households, family members work the equivalent of a full-time, year-round job, yet remain poor.
Low-income households are often perceived as relying primarily on welfare benefits to make ends meet. Yet the data on work experience and sources of income do not support that stereotype. Low-income families, in fact, receive a greater share of their income from earnings than from any other source. On average, poor households in Massachusetts have total incomes averaging about $5,100; of that,
earnings from work account for the largest share, 43.3 percent;
only one-third — or 33.9 percent — comes from public assistance;
less than one-twentieth — 3.6 percent — comes from child support;
and another 3.6 percent comes from unemployment insurance.
8. On October 1, 1996, the federal minimum wage rose to $4.75 a hour, with another increase to $5.15 scheduled for July 1, 1997. The minimum wage in Massachusetts, however, is set higher than the federal minimum. As of January 1, 1997 the minimum wage stood at $5.25 in Massachusetts. Even with that increase, someone working full-time, year round would only earn $10,920, or $1,996 less than the poverty rate for a family of three and $5,512 less than the poverty rate for a family of four.
9. A two-parent family is only considered unable to work if both parents are retired, disabled, or ill. If one parent is able to work, the family as a whole is considered eligible for the workforce in this study.
10. The demographic data on working families that follow are restricted to families that work a total of 520 hours or more a year, the equivalent of three months of full-time work. This allows an analysis of those families with some significant work experience, leaving out those families whose work experience was particularly brief.
11. A metropolitan area is defined as having a central city population of at least 50,000 or an area population of 100,000 or more. Metropolitan areas include central cities and all surrounding suburban areas that are economically integrated with the central city.