The Great Recession

There were more than 10 million low-income working families in the United States, an increase of nearly a quarter million from the previous year. Between 2007 and 2009, the share of working families who are low-income—earning less than 200 percent of the official poverty threshold—increased from 28 percent to 30 percent. This now means that nearly 1 in 3 working families in the United States, despite their hard work, are struggling to meet basic needs.

The Working Poor Families report says that since the recession began in 2007, more than 55 percent of America’s labor force has been affected by joblessness, reduced hours or were relegated to part-time work. The report writes:
“When the recession hit, many working families joined the ranks of the unemployed or dropped out of the workforce altogether. Others continued to work but saw their incomes drop as businesses tightened their belts."

Forty-five million people, including 22 million children, lived in low-income working families, an increase of 1.7 million people from 2008. Forty-three percent of working families with at least one minority parent were lowincome, nearly twice the proportion of white working families (22 percent).

The disparity between the rich and poor is steadily growing. Income inequality has increased by 5 percent since 2007. The top 20 percent of households take in almost half the wealth, the report said. What’s more, the top earning families earned 10 times more than those at the bottom. A large reason for the gap is that wages have not increased even as productivity continues to rise. Wage stagnation has been one of the most common consequences of the downturn. The Economic Policy Institute pointed out in August, wages “grew at less than half the rate they were growing during the period immediately prior to the recession.” From a long-term perspective, the real average hourly earnings have practically remained unchanged for 35 years. In other words, productivity growth has not transferred to wage gains.

The recession has been especially hard on men, who were more highly concentrated in the depleted manufacturing, construction and financial sectors. In addition to men, minorities and those without a college education were especially affected by the downturn. Last year, 43 percent of households with one or more minority parent were low-income, and the number of children in poverty also increased. The cycle of poverty has been partly tied to education. Those with only a high school diploma had an unemployment rate as high as 15 percent during the Great Recession. More job openings require a higher education and the steady decline of manual labor jobs have created a more competitive market. More than half of the low-income families had parents with only a high school diploma.