How best to boost the 'working poor'?

Nearly 1 in 3 working families now qualify as 'working poor.' More affordable college – and a more progressive tax system – would help.

David R. Francis

The Great Recession has badly damaged the "American dream" – the national ethos that everyone can move toward a richer and fuller life according to their work and ability, regardless of social class and circumstance.

"We are moving away from shared prosperity," says Brandon Roberts. "It is disturbing."

Mr. Roberts is lead author of a new study of "working poor" families, the nearly 1 in 3 working families who earn less than 200 percent of the official poverty threshold. These are families who do have a member working steadily, but are "hard-pressed to stay afloat in the weak economy," he says. They are one paycheck away from major financial difficulty.

The poverty line varies according to state and size of family. But for a family of four it runs about $22,000 in Washington, D.C. The families of the working poor earn more than that, so they don't qualify for all sorts of aid, but they still have to manage on less than $44,000 a year in the nation's high-priced capital.

In 2008, the first year of the Great Recession, these families already represented 28.8 percent of all working families. A year later, they made up 30.1 percent – an increase of 250,000 families, Roberts says. These families numbered 45 million people, including 22 million children.

"The plight of these families now challenges a fundamental assumption that in America work pays," notes the study by "The Working Poor Families Project."

"There is really broad-based distress," says Lawrence Mishel, president of the liberal Economic Policy Institute in Washington. American incomes "remain substantially below what they were before the recession."

A more vigorous economic upturn would help reverse the situation. But the current recovery from this deep recession has been slower than usual. To foster substantial improvement would require changes in policy.

To Roberts, the best way to move working poor families into the middle class is to boost their financial ability to pay for a college education for their children.

That view is based on the lower unemployment rates for the educated. Last March, those with less than a high school diploma were experiencing a 15.5 percent jobless rate. The unemployment rate for those with a high-school diploma was 10 percent; those with a bachelor's degree or higher, only 4.3 percent.

Mr. Mishel maintains that Washington needs more active government policies to reverse a 30-year trend toward income and wealth concentrating at the top of the income ladder as a result of a failed "laissez-faire experiment" of reduced government intervention in the economy. He'd like to see a more progressive tax system (higher taxes on the well-to-do), a higher minimum wage plus other changes to help the working poor, and rule changes to make it easier for trade unions to organize and bargain for improved wages and other working conditions.

Such measures, he says, would "strengthen our democracy so money doesn't run it."

Besides the rising concentration of income and wealth at the top, a multidecade trend that most analysts acknowledge, the Roberts study notes that the different income groups are increasingly sorted into different neighborhoods, schools, and social networks. So poor children are at greater risk of being isolated from educational and economic opportunities that might provide a path out of poverty.

•David R. Francis writes a weekly column.