The working poor are working people whose incomes fall below a given poverty line due to low-income jobs and low familial household income. These are people who spend at least 27 weeks in a year working or looking for employment, but remain under the poverty threshold. In the United States, the official measurement of the working poor is controversial. Many social scientists argue that the official measurements used do not provide a comprehensive overview of the number of working poor. One recent study proposed over 100 ways to measure this and came up with a figure that ranged between 2% and 19% of the total United States population.
Measurement
Absolute According to the US Department of Labor, the working poor "are persons who spent at least 27 weeks [in the past year] in the labor force (that is, working or looking for work), but whose incomes fell below the official poverty level." In other words, if someone spent more than half of the past year in the labor force without earning more than the official poverty threshold, the US Department of Labor would classify them as "working poor". (Note: The official poverty threshold, which is set by the US Census Bureau, varies depending on the size of a family and the age of the family members.) As of 2021, the poverty threshold for a family of four people is $27,479 and for a single person $13,788. The official poverty threshold is calculated by using the Consumer Price Index for goods, multiplying the cost of a minimum food diet in 1963 by three, a family's gross income (before tax), and the number of family members. In 2017, there were 6.9 million individuals defined as working poor. Because there has been, and still is, debate on how accurate using this metric is, the US Census Bureau began publishing a Supplemental Poverty Measure in 2011. The main difference using this metric is that a person's poverty status is determined after subtracting taxes, food, clothing, shelter, utilities, childcare and work-related expenses, and including government benefits and people living in the home that do not fit the "family" definition (such as an unmarried couple, or dependent foster children). Using the SPM, the poverty rate overall increases, particularly the rate of the working poor. In 2018, the official rate was 5.1% vs the SPM's measure of 7.2%.
Relative In Europe and other non-US, high-income countries, poverty and working poverty are defined in relative terms. A relative measure of poverty is based on a country's income distribution rather than an absolute amount of money. Eurostat, the statistical office of the European Union, classifies a household as poor if its income is less than 60 percent of the country's median household income. According to Eurostat, a relative measure of poverty is appropriate because "minimal acceptable standards usually differ between societies according to their general level of prosperity: someone regarded as poor in a rich developed country might be regarded as rich in a poor developing country." According to the latest data the UK's working poor rate is 10%, with the median income being £507 per week in 2018.
Prevalence and trends In 2018, according to the US Census Bureau's official definition of poverty, 38.1 million US citizens were below the poverty line (11.8% of the population). However this number includes children under 18 years of age, elders over 65, and people with disabilities who cannot work. The poverty rate of people between the ages of 18 and 64 was 10.7%, or 21.1 million people. Of these, nearly half, 5.1%, were working at least part-time. Using the US Census Bureau's definition of poverty, the working poverty rate seems to have remained relatively stable since 1978. There is some controversy around this measurement, namely how the dollar amounts that make up the poverty threshold are calculated. In 1961, the US Department of Agriculture came out with an "economy food plan" to be used as a temporarily during an emergency or when a family is in need. This plan did not account for any food consumption outside of the home, and while it was considered nutritious, it was limited in variety and monotonous, thus the temporary designation. The US government took this number and—because the average family at the time spent one-third of their income on food—multiplied it by three. This has remained the standard way to set the poverty thresholds. The food plan has not changed, it has only been adjusted for inflation. One argument is that this is no longer an accurate way to measure poverty because the average lifestyle has changed dramatically since the 1960s.
US compared to Europe Other high-income countries have also experienced declining manufacturing sectors over the past four decades, but most of them have not experienced as much labor market polarization as the United States. Labor market polarization has been the most severe in liberal market economies like the US. Countries like Denmark and France have been subject to the same economic pressures, but due to their more "inclusive" (or "egalitarian") labor market institutions, such as centralized and solidaristic collective bargaining and strong minimum wage laws, they have experienced less polarization. Cross-national studies have found that European countries' working poverty rates are much lower than the US's. The following graph uses data from Brady, Fullerton, and Cross (2010) to show the working poverty rates for a small sample of countries. Brady, Fullerton, and Cross (2010) accessed this data through the Luxembourg Income Study. This graph measures household, rather than person-level, poverty rates. A household is coded as "poor" if its income is less than 50% of its country's median income. This is a relative, rather than absolute, measure of poverty. A household is classified as "working" if at least one member of the household was employed at the time of the survey. The most important insight contained in this graph is that the US has strikingly higher working poverty rates than European countries.
Risk factors
Race Minorities in the US are disproportionately affected by poverty. Blacks and Hispanics are twice as likely to be part of the working poor than Whites. In 2017, the rate for Blacks and Hispanics was 7.9%, and 3.9% for Whites, 2.9% for Asians.
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