Co-authored by Deborah Povich
Report: Low-Income Working Families: The Racial/Ethnic Divide
The growing national concern about income inequality across much of American society should focus on the sharp and damaging divide within the ranks of low-income working families -- with whites and Asians faring better than other racial and ethnic groups.
While minorities make up 40 percent of all working families, they constitute 58 percent of all low-income working families.
In 2013, working families headed by racial and ethnic minorities were twice as likely to be poor or low-income as working families headed by whites, according to a new analysis of Census Bureau data by the Working Poor Families Project. This gap has grown since the onset of the Great Recession.
Despite the U.S. economic recovery, low-wage jobs (paying less than $13.83 an hour) have accounted for almost 60 percent of the employment gains since 2010. As a result, the number of low-income working families has been growing and now represents almost a third of all U.S. working families. That's 48 million people, half of whom are children.
Moreover, the overall share of racial and ethnic minority workers in the U.S. labor force is growing at an even faster rate than that of white workers. Within 25 years, racial and ethnic minorities are expected to make up more than half of the entire U.S. working age population.
It is time for state policy-makers to reduce this divide. The impact of the stark racial and ethnic disparities among low-income workers reaches every state, weakening society, reducing economic competitiveness, defying American values and challenging state governments to take more steps to heal the economic divide.
The extent of these challenges is underscored by these report findings:
• Less than one-fourth of white and Asian American working families are low-income (earning less than 200 percent of the poverty line) -- compared with almost half of African American and American Indian working families and 55 percent of Latino working families.
• Education levels play a large role in workers' earning power. More than 50 percent of Latino, low-income families has at least one parent without a high-school equivalency degree, versus just 16 percent of whites. But this is not the whole story: The median earnings for white high-school dropouts working full time is slightly higher than that of black full-time workers who are high-school graduates, suggesting persisting discrimination.
• Young adult working families headed by racial and ethnic minorities (aged 18 to 24) are much more likely to be low-income than those headed by older workers. Among young working families headed by African Americans, 84 percent were low-income -- pointing to the difficulties they have in providing adequately for their children.
• Low-income working families face significant barriers to health-care access, with 56 percent of Latino families having a parent without health insurance, compared with 29 percent for whites. This reflects income, education, and language barriers, as well as the unique challenges for undocumented immigrants obtaining health care in many states.
Recently, there have been some encouraging signs of wage hikes for low-income workers, initiated most prominently by IKEA, Gap, Walmart and some other large employers. These companies have decided that rewarding hard work with increased wages is good for their workers and overall enterprises. While more such private-sector steps are encouraged, state governments can do much more to narrow the economic divide among low-income working families.
These disparities cannot be erased overnight, but state policymakers can make important strides with a two-pronged approach: simultaneously increasing access to education and training for low-income workers and enacting policies that make work pay.
Closing education gaps is critical. States should increase need-based tuition aid, especially for low-income, part-time, minority and undocumented students. They should provide child care and other support for low-income adult students. And they should strengthen links between English-language learning programs and postsecondary education and training.
The levels of investment among states in making work pay are very inconsistent, particularly given post-recession budget cuts in assistance for low-income workers. Among the most effective state policy solutions: increasing minimum wages, providing state Earned Income Tax Credits, mandating paid sick leave, enforcing equal-pay provisions, widening access to affordable child care, and, not least, expanding Medicaid eligibility.
Much is at stake here. In little more than a generation, racial and ethnic minorities will make up the majority of the U.S. population and workforce, and a disproportionately high percentage of them will be low-income. By reducing gaps in education and increasing the wages and benefits for service-sector and other low-income jobs, policymakers can reap the dual benefits of fueling economic growth while supporting all working families in achieving economic security and the American Dream.
Deborah Povich and Brandon Roberts manage The Working Poor Families Project, a national initiative focused on state workforce development policies. A full report on their recent Census data analysis is available at workingpoorfamilies.org.