Work is undeniably the American way. Since the earliest Puritan settlements, Americans have made a point of equating work with moral virtue and material gain–with good effect. Centuries of social and economic progress on American soil would not have been possible without the ethic, and incentives, of hard work. It comes as no surprise, therefore, that many still take for granted our nation’s promise that anyone who works hard and plays by the rules can get ahead.
But does that vision of work and reward still hold true? What happens when law-abiding citizens work long hours and still do not make enough money to pay the bills?
For millions of Americans born and raised in difficult circumstances, work and poverty now go hand in hand. Known as the “working poor,” these workers struggle to earn their keep and maintain their hope.
The scope of the challenge is immense. Five years after the Great Recession officially ended, the ranks of the working poor in the United States has swelled to the highest rate in more than 25 years, according to the Bureau of Labor Statistics. Fully half of American jobs now pay less than $33,000 per year and one in four pay poverty-level wages of $22,000 or less. The National Employment Law Project reports that 60 percent of all jobs lost during the Great Recession were in mid-wage occupations while 59 percent of jobs gained through 2012 were in lower-wage occupations.
Meanwhile, the number of high-income jobs lost and gained remains unchanged at about 20 percent. As a consequence, Americans in the bottom income quintile now receive the smallest share of income—3.3 percent—since record keeping began in the 1960s, according to the Census Bureau. In contrast, the share of income gains flowing to the top 1 percent between 2009 and 2012 reached 95 percent, according to U.C. Berkeley economist Emmanuel Saez.
For the 27 million adults who are either unemployed or underemployed, and the 48 million people in working poor families who depend on some form of government assistance to get by, The Stanford Center on Poverty and Inequality reports that means-tested programs, excluding Medicaid, have remained essentially flat since the early 1990s at around $1,000 per capita per year. Only unemployment insurance and food stamps saw a marked increase during the recession, although both are under continued assault in Congress.
New Hampshire is not immune to these trends. According to the U.S. Census Bureau, seven in 10 low-income families in NH work—two-thirds of them full-time. Of the nearly 150,000 working families across NH, one in five is defined as low-income with annual earnings below 200 percent of the federal poverty line, or less than $37,000 for a family of three, according to the Working Poor Families Project (WPFP), a national initiative focused on state workforce development policies. More than 100,000 of NH’s 1.3 million residents currently live in low-income homes. Members of working poor families often have limited educational opportunities and attainment, and they tend to work in service, manual labor or retail jobs where supply outstrips demand. What’s more, the working poor in NH are more likely to be women, children and people of color.
Defining NH’s Working Poor
In nearly half of NH’s 29,000 low-income working families, a single mother is responsible for both raising and supporting her kids, according to WPFP, which has severe economic and social-emotional implications for children and families. Although NH enjoys one of the lowest rates of low-income working families overall, it ranks in the bottom 20 states in the nation for the proportion of female-headed working families that struggle to get by. And in NH, women earn 79 percent of what men earn, below the national average of 82 percent, according to the NH Women’s Initiative.
Not surprisingly, NH residents with low educational attainment are disproportionately represented among the working poor. A majority of working mothers in low-income families and around half of all parents have no post-secondary education, according to WPFP. And in nearly one out of five low-income working families, neither parent has a high school degree, a dropout rate that’s more than twice as high as that for all NH adults. The average annual earnings for high school dropouts nationwide is roughly $21,000, or less than a third of those with a bachelor’s degree or higher, according to the WPFP.
Although no group in NH is spared the reality–or the risk–of being part of the working poor, children and members of minority groups are particularly vulnerable. Around 50,000 NH children–one in five–are currently raised in low-income families where at least one parent works, and in nearly two-thirds of those families, the parent(s) works full time, according to the Kids Count Data Center, a project of the Annie E. Casey Foundation. Although the number of NH children in low-income working families is far less than the nationwide rate of 37 percent, other statistics suggest child well-being in NH is under threat. For example, the number of NH children living in poverty jumped by 30 percent between 2011 and 2012, for a total increase of 75 percent since 2007, according to the Carsey Institute at the University of NH in Durham.
Once in poverty, it becomes a challenge to escape its hold. The National Center on Children in Poverty finds that poverty is frequently passed from one generation to the next, with nearly half of those raised in persistent poverty nationwide still poor at the age of 35 and raising poor families of their own. Meanwhile, less than 4 percent of children raised in poverty join the upper-middle class as adults, according to the Pew Charitable Trusts.
Race and ethnicity also come into play. Fully 28 percent of minority working families in NH are low-income, according to WPFP—40 percent higher than working families overall.
In 27 percent of NH households, where average household size is 2.5 people, annual incomes are below the low-income threshold, according to the U.S. Census Bureau’s American Community Survey (ACS). Four in 10 households earn wages of less than $50,000 per year, well below the median household annual income of $65,000, and disconcerting given the high cost of housing in most of NH. In fact, housing here ranks near the bottom of all 50 states in terms of affordability. An estimated seven in 10 low-income working families in NH spend a third of their income or more on housing, the commonly accepted threshold for housing affordability according to WPFP.
Of that 27 percent, only 3 percent receive Temporary Assistance for Needy Families (welfare), according to the Census. At $4,500 per year, the average welfare payment is half the annual amount paid in disability benefits and less than a third of the annual amount of Social Security. To qualify for TANF, families must be in deep poverty earning less than $10,000 per year for a family of three and a five-year lifetime limit applies.
Stretching the Dollar
The money low-income workers earn doesn’t go nearly as far in NH as in other states due to the high cost of living. City-by-city analysis across more than 300 of the nation’s largest municipalities by Governing magazine reveals that NH’s $7.25 minimum wage, set at the federal floor, has a real purchasing power of just $6.01 in Manchester, making Manchester’s cost-adjusted minimum wage the 15th lowest nationwide. Some 70,000 NH workers are currently working jobs that pay at or slightly above the minimum wage, according to the NH Department of Employment Security, with median earnings below $11 per hour, or $9 per hour in real purchasing power relative to other states.
Substandard wages and the rising cost of living are strongly felt by the more than 100,000 NH residents in low-income working families, especially in areas like housing. According to the latest available regional data on housing costs for 2010, the median monthly rental cost ranged from a low of $600 to $700 in the rural North Country to more than $1,200 in the Seacoast, according to the Kids Count Data Center. More recent 2014 data places the statewide fair market rent at $1,049 per month, according to the NH Fiscal Policy Institute and Housing Action NH.
As a result of rising housing costs, the “housing wage” that a NH worker would need to earn working full-time in order to cover the cost of housing at 30 percent of income, is more than $20 per hour, making NH the 11th most expensive state in the nation for renters, according to the NH Fiscal Policy Institute and Housing Action NH. At that rate, a minimum wage worker would be required to work 111 hours per week, the equivalent of 2.8 full-time jobs, in order to rent a home at the affordability threshold. Less than half of all NH renters currently earn the housing wage and fully 40 percent of NH children are considered to be at risk of losing their homes due to lack of affordability.
Taken together, substandard wages, insufficient hours and a rising cost of living have dealt, and continue to deal, a serious blow to tens of thousands of Granite State families struggling to get by. Making matters worse, economic insecurity has a tendency to place short-term needs and wants ahead of longer-term investments in areas like education, housing and health. Absent such investments by the individuals, private charities and/or the government, low-income families are unlikely to experience socioeconomic mobility from one generation to the next.
While the causes of working poverty are many and complex, some primary causes include the loss of industrial jobs and organized labor, declining two-parent families and social capital, insufficient educational supports for children in high-poverty environments, and a pervasive lack of political voice for people with limited means. Left unchecked, they pose a significant threat to NH’s way of life.
Kathleen’s Story
For Kathleen, work was always part of the plan. Poverty was not. The Keene native, who has lived and worked in the Peterborough area for most of her adult life while raising her daughter, was determined to break from her hardscrabble past. “A lot of uprooting and going,” is how she sums up her childhood in rural New England. By the time she reached 8th grade, her family had lived in 26 different homes. It was not for a lack of trying to settle down.
“Dad was a very hard worker, a double-shift man,” Kathleen says. “He worked in manufacturing, construction, paper mills, at a creamery, picking apples, but couldn’t settle down at a steady job.” With her mother in chronically poor health, “I felt like when I was 4 years old, I was already being the adult in my house, mother-henning,” she says. As a rule, luxuries were few. She recalls how her father saved to buy her favorite childhood toy. “Dad would go to the guys at the plant, get them to save their soda bottle caps so I could get a doll” in exchange for the large number of required caps. Kathleen saw education as her path out of poverty. Neither of her parents made it past junior high and they regretted it, she says. Although money was always scarce, Kathleen juggled five years of part-time community college, while working a slew of low-wage jobs, before transferring to the University of Massachusetts at Amherst. Two and a half years later, she proudly became the first member of her family to earn a bachelor’s degree, cum laude.
Kathleen says her dad insisted on attending her college graduation in spite of considerable health problems after a construction site accident left him a paraplegic on disability. She would later help sustain him during his 26 years in a nearby nursing home.
In spite of her college degree, Kathleen’s career did not pan out. For one thing, there were family complications. Six months after giving birth to her only child, her boyfriend left the scene for good, leaving her to cope with childcare and long hours at a low-wage office job. Kathleen says the welfare office in Keene made a half-hearted attempt to pursue child support but came up short and decided to call it quits. She says she never took welfare or food stamps–-“I always wanted to pay my own way.” Still, she says rent subsidies have been a godsend over the years.
Inspired by her father, “a union man” at heart, Kathleen tried to organize her female colleagues into a union at one of her early retail jobs. She was unsuccessful and later was let go. She then took up administrative work for the local school district, but the pay never broke $9 an hour. Eventually, she found her way into a small-scale manufacturing company in southern NH, where she processed orders and provided technical support. Although she enjoyed the work, the occasional chats with her manager about a promotion never went anywhere.
Thirteen years after taking the job, the company retooled and Kathleen was let go. Her pay—the most she’s ever earned with modest benefits—was $11.50 an hour. Since that time, she has worked a range of tem
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