President George W. Bush, in his re-election campaign, continues to tell us the economy is turning around and his tax cuts are spurring a booming recovery for the nation.
But a newly released report paints a very different picture, at least as far as the personal finances of many American families are concerned. It shows one of every four families in this country9.2 million of themdraw wages so low they are barely surviving.
The report, titled Working Hard, Falling Short, is the product of the Working Poor Families Project, a national study program supported by the Annie E. Casey, Ford and Rockefeller foundations. Launched in 2001, it involves 15 non-profit groups in a like number of states, including Illinois.
This study clearly shows that for many families no matter how hard they try, entry into the middle class and a sustainable family life is always just out of reach.
The authors of the study comment: As a country, we must act now to ensure that our investments generate enough skilled workers to keep the economy thriving. Doing so will lead to an increased tax base.
The report turned up a number of revealing statistics. For example: one in four working families with children is low-income; 40 percent of minority working families are low-income, twice the percentage of white working families; a married couple heads more than half of low-income working families; 35 percent of low-income working families have a parent who did not graduate from high school, but 42 percent have a parent with some post-secondary schooling.
Another fact is that more than half of low-income working families pay more than a third of their income for housing, and more than a third of these families have a parent with no health insurance.
Of all the working families in this country, more than 25 percent can be classed as low-income. That means a family of four earned less than $36,784 in 2002 at a time when the median U.S. income for a family of four was $62,732. Out of 9.2 million low-income working families, 2.5 million earn less than $18,392 annually. If the family has a minority parent, it is twice as likely to be low-income as a family with white parents. That speaks volumes about racial attitudes in this country today.
What is the situation in Illinois? We have 100,000 families living in poverty; 350,000 families have incomes that are less than twice the poverty level, while affluent families have incomes 8.6 times that of the least affluent families. The wage disparity in this state ranks 45th in the nation. That disparity is growing, threatening the stability of Illinois communities and bringing negative economic and social repercussions.
One of the chief factors behind this disparity is the fact that worker skills and employer needs too often do not match up. While employers are trying to find workers with the necessary education and skills, Illinoians with low incomes are finding access to the necessary training and education is growing more and more limited.
Another reason many families cant find the type of work they seek is that Illinois economic development strategies dont ensure the creation of jobs that will allow families to move ahead and achieve self-sufficiency.
Business assistance efforts in this state are not tied to job creation goals targeting disadvantaged workers. Companies that benefit from these assistance programs arent required to invest anything in worker training.
Illinois badly needs to reform its tax system and correct the structural issues that contribute to the present fiscal crisis.
Brandon Roberts, one of the authors of the national study, said: Our data is very solid and shows that this is a much bigger problem than most people imagine. According to the study, one in five workers are in jobs where the median wage is less than $8.84 an hour, poverty level for a family of four. The federal minimum wage, which the administration does not want to raise, is $5.15 an hour, not enough to keep a family of three out of poverty.
Families in that situation are flirting with financial disaster. They have no cushion. Any unexpected misfortunean illness, flooded basement, car breakdowncan push them over the edge.
The report said: Consider the motel housekeeper, the retail clerk at the hardware store, or the coffee shop cook. If they have children, chances are good that their families are living on an income too low to provide for their basic needs. Those families harbor one-third of all children in American working families.
There are many myths out there about low-income families. Some of them are: that low-income families dont work; that they dont work hard; that low-income families are headed by single parents, or are headed by immigrants; that these families have very young parents and that low-income families are predominantly minorities.
The facts are that 71 percent of low-income families work, the average annual amount of work by these workers is 2,500 hours, equal to 1.2 full-time jobs. Some 53 percent of low-income working families have a married couple at their head, and 72 percent of these families have American-born parents. Some 88 percent of low-income working families have a parent between 25 and 54 years old. Finally, 47 percent of low-income working families have white, non-Hispanic parents only; 28 percent have a Hispanic parent, and 20 percent have an African-American parent.
The numbers demonstrate the widening gulf between the bottom economic level and the upper middle-class strata. One-fifth of working families earn an average income of $18,700 annually; thats five percent of all the money earned by working families; the middle fifth, with an average income of $56,100, takes 16 percent; and the upper fifthan average income of $158,100 annuallytakes 46 percent.
A study by the Brookings Institution, published this year, tracked prime-age workers earning less than $12,000 annually between 1993 and 1995 to examine their economic progress. The study found that only 27 percent of these workers consistently earned enough income six years later to raise a family of four from poverty.
Beth Shulman, in her 2003 book The Betrayal of Work, said low-wage jobs damage us all, costing children, families, communities, the economy and even our democratic republic. Shulman said: high school children from low-income families who had high scores on standardized tests were less likely to attend college than all students from the top income group.
President Bush and Sen. Kerry have said little about this complex and very disturbing problem. A number of concrete proposals have been made by various organizations and agencies to help alleviate this problem, but government and the media are paying little attention.
As Bob Herbert, writing in The New York Times, put it: Were quick to give lip service to the need to work hard, but very slow to properly reward hard work.
More information about the report can be obtained at: www.aecf.org/initiatives/jobsinitiative/working poor.htm