Working poor

Working poor is a term used to describe individuals and families who maintain full-time jobs but remain in relative poverty due to low levels of pay and dependent expenses. Often, they have negative net worth and lack the ability to escape their situations. In some situations there are people who choose to reject material benefits or prefer a lifestyle that most would regard as lazy or degenerate. These people would not fall within the category of working poor.

The extent and causes of "working poverty"

In the United States, according to the government Bureau of Labor Statistics, there were 6.4 million working poor in 2000 [1]; by 2003 the number had grown to 7.4 million [2]. In 2004, Business Week suggested that [3] a more accurate figure would be 28 million, counting those over eighteen, employed, and making less than $9.04 an hour, a full-time salary of $18,800 per year and the federal poverty line for a family of four.

The nature and extent of the working poor in the United States, however, is a contested subject; while both sides of the political spectrum acknowledge that there are non-negligible numbers of working people living in poverty, there is disagreement as to whether or not this reflects a genuine flaw with current economic policy, and what the response should be. For example, the Business Week magazine article cited above, which was generally critical of the political response to the problem of the working poor, itself received criticism from Townhall.com columnist Thomas Sowell, who claimed that the magazine had, among other sins, inflated statistics.

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 [4]. Citing the author Horatio Alger, Sowell suggested that the intelligensia had dismissed words such as moxie and gumption, and that the working poor themselves, and not larger socioeconomic factors such as the lack of labor unions and the changing nature of employement, as suggested by Business Week, were to blame for the situation.

Problems faced by the working poor

Workers without marketable skills will often face low wages, economic exploitation, unpleasant working conditions, and few opportunities to attain skills that would allow them to escape their situations, especially if leisure time for education, libraries, schools and student loans are unavailable.

In 2004, the bulk of the working poor in the United States and other western countries occupy unskilled and semi-skilled positions in the secondary labor market, predominantly in the service sector. In many cases, members of the working poor work at multiple part-time jobs, which require nearly full-time commitment but are classified as "part time" so some benefits, like medical insurance, are not paid by employers [5]. This situation is sometimes referred to as precarious employment.

The working poor often live from "paycheck to paycheck", so unexpected costs (such as medical or repair costs) can bring them close to financial ruin. Those such as single parents who don't have the ability to save or who have made poor decisions in their past can descend into a debt spiral, perhaps due to reliance on credit cards to pay for living expenses, that makes their financial position untenable.

Policy responses

Job-training programs offered to low-income individuals can ameliorate this situation, by providing access to marketable skills. They also enable society to benefit by reducing ongoing welfare payments. However, many of these training courses do not have a tenable exit strategy, leaving workers trained for jobs they may not be able to acquire.

In many countries, budgeting services provided by state or other agencies have been made available to help the poor manage what they earn. Countries like Australia and New Zealand have policies designed to protect the vulnerable in society and which target welfare to deserving cases, especially to the working poor. Many social agencies and lawyers are calling for labor laws that ensure that those who operate in the precarious employment sector are accorded the same rights as citizens in full time employment.