Economy Bytes: Working Poor People in the United States


National Alliance to End Homelessness

Report | December 1, 2010

Files: PDF | 272 KB | 2 pages

In this second of the Economy Bytes series, we explore characteristics of the “working poor” population in the United States. While most working poor people will not become homeless, they are much more likely than the general working population to experience and be affected by risk factors associated with homelessness, including sudden and significant loss of income, severe housing cost burden, and doubled up living arrangements.

We define “working poor” as individuals who work at least 27 weeks a year but still fall at or below the poverty line. The “general working population” is defined as all individuals who worked over 27 weeks per year. Based on American Community Survey (ACS) estimates, in 2008 there were an estimated 8,013,629 working poor people; this population represents 19.4 percent of the estimated 41,317,308 living at or below the federal poverty line and 5.5 percent of the 146,152,382 individuals who comprise the general working population.

According to the Bureau of Labor Statistics (BLS), “there are three major labor market problems that can hinder a worker’s ability to earn an income above the poverty threshold: low earnings, periods of unemployment, and involuntary part-time employment. In 2008, 85.5 percent of working poor people experienced at least one of the major labor market problems.”

This brief provides an overview of the employment characteristics of the working poor population and explores the frequency with which this population experiences the risk factors of doubling up or a severe housing cost burden.

Working poor people are more likely to be doubled up or experience a severe housing cost burden than the working population.

Doubling up in this case is defined as an individual or family living in a housing unit with extended family, friends, and other non-relatives due to economic hardship. A household is severely housing cost burdened if it pays 50 percent or more of its monthly income on housing costs. Both conditions are either a sign or consequence of housing instability, and can be a precursor to homelessness.

Working poor people are much more likely than the general working population to experience both conditions. It is estimated that in 2008, 37.6 percent of working poor households experienced a severe housing cost burden, in comparison to just 3.8 percent of workers in the general population. Likewise, 7.8 percent of the working poor were doubled up with family or friends as compared to less than 6.5 percent of the general working population.

Working poor people are tenuously attached to the workforce.

Data show working poor people worked fewer weeks per year than the general population. Working poor people on average worked three fewer weeks per year than the general working population—working 46.2 weeks a year to the general working population’s 49.1 weeks. According to ACS 2008 estimates, working poor people are also less likely to have worked in the week prior to when the survey was administered. Almost 95 percent of the general working population had worked in the last week, as compared to 87 percent of the working poor population.

The occupations which employ working poor people are volatile.

In order to better understand market factors affecting working poor people, we now look at occupational characteristics of this population. In 2008, the top five occupations which employed working poor people were: cashiers, waiters and waitresses, cooks, maids/housekeeping cleaners, and retail sales persons. Poor and non-poor workers in these fields work fewer hours per week on average, and, overall, are paid lower wages than workers in the general population. Workers in these “working poor” occupations worked an estimated 30.6 hours per week. Across all occupations, the workers averaged 40.1 hours per week.

Furthermore, 7 in 10 working poor individuals experience low earnings.5 The top five occupations which employ working poor persons can be broadly categorized within the BLS employment classifications of retail trade and leisure/hospitality. According to 2008 BLS data, workers in the leisure and hospitality sector were paid an average of $12.78/hour, and those in the retail trade sector were paid $15.23/hour. This compares with average private sector earnings of $21.62/hour.

The occupations which employ working poor people are also more subject to seasonal job gains or losses. This suggests that a sudden loss of income by workers in these fields may be more likely than workers employed in more stable fields. This level of volatility, particularly when coupled with other factors such as being doubled up or experiencing a severe housing cost burden, put the working poor at a higher risk of experiencing homelessness than the general working population.

The circumstances faced by poor workers — low earnings, periods of unemployment, and involuntary part time employment — represent challenges to economic stability and risk of homelessness. While the economy is beginning to recover, unemployment, underemployment, and poverty are expected to remain major issues for individuals in the workforce for the next several years, particularly for those defined as working poor.

Interventions used to address homelessness must take into consideration the unique needs and characteristics of this population, given that working poor people constitute significant portions of the both the working and poor populations. Policymakers should consider the characteristics and circumstances of the working poor population when planning solutions to homelessness.