In March, Rep. Paul Ryan (R-WI) said that one cause of poverty is a “culture problem” for inner city men: “men not working and just generations of men not even thinking about working or learning the value and the culture of work.” While he backed away from the racially charged ‘inner city’ language, he stood by the idea that we can alleviate poverty if poor people would just work more. That’s a common idea: that the poor just need to work more or work harder to escape their financial situations.
But that may not in fact be the case. In fact, the majority of able-bodied, adult, non-elderly poor people worked in 2012, according to a data analysis by economist Jared Bernstein. There were about 21 million non-disabled, poor adults that year, and about half of them, or 11 million, worked. Another 3 million didn’t work because they were in school. If those in school are taken out of the picture, 57 percent of the poor people we would expect to work did so. Five million didn’t work because they had an illness or disability.
It’s true that these figures are lower than for better-off Americans. Among non-poor, able-bodied adults, 85 percent worked in 2012. But the poor were facing an economy where the unemployment rate was over 8 percent and even today there are more than two job seekers for every job opening. Unemployment rates have also been higher for those with less education, who tend to have lower incomes: those without a high school diploma have a 9.1 percent unemployment rate and those with a diploma have a 6.5 percent rate, while college graduates have just a 3.2 percent rate.
It’s not hard to see why someone might work and still end up poor. Working a minimum wage job full time brings in about $14,500 a year, which leaves a parent of two $3,000 below the poverty line. The minimum wage isn’t enough to afford rent in any state in the country. This wasn’t always the case. In the 1960s, the minimum wage kept that family of three out of poverty, and even in the 1970s it kept a family of two above the line. Raising the wage would lift millions out of poverty and reduce the poverty rate.
There are other misconceptions about why the poor end up poor. Some think they bring hardship on themselves by being unwise with their money. But the poor spend a smaller percentage of their budgets on eating out and entertainment while spending more on the necessities than their better off peers. And while both rich and middle class Americans have increased their spending habits since the recession, the poorest have actually cut back.