Policy debates about whether wages and benefits from work provide enough resources to achieve economic self-sufficiency rely on data for workers, not working families. Using data from the Current Population Survey, we find that almost two-thirds of families working full time earn enough to cover a basic family budget, but that less than a quarter of low-income families do. A typical low-income full-time working family with wages below a family budget would need to earn about $11.00 more per hour to cover expenses. This wage gap is larger for Black, Hispanic and immigrant families. Receipt of employer-provided benefits varies—health insurance is more prevalent than pension plans—and both are less available to low-income families, and Black, Hispanic and immigrant working families. Findings suggest that without policies to decrease wage inequality and increase parents’ access to jobs with higher wages and benefits, child opportunity gaps by income, race-ethnicity and nativity will likely persist.
STUDY: One-Third of U.S. Families Who Work Full Time Do Not Earn Enough to Cover Basic Needs Like Housing, Food and Child Care
More than three-quarters of full-time working families with low incomes do not earn enough to afford basic necessities; Black and Hispanic families face even greater odds
Waltham, Massachusetts — (August 31, 2022) — Thirty-five percent of families who work full time year-round do not earn enough to cover basic needs like housing, food and child care, according to a new study released in RSF: The Russell Sage Foundation Journal of the Social Sciences.
The study, authored by researchers at Brandeis University’s diversitydatakids.org program at the Institute for Child, Youth and Family Policy, examines how earnings from parents’ full-time work stack up against the resources necessary to meet a “basic family needs budget,” or the amount needed to afford basic needs like housing, food, medical care, transportation, child care and minimal household expenses.
Researchers find that the situation is especially dire for low-income families with children. More than three-quarters (77%) of those who work full time do not earn enough to cover their basic needs. Most of these families would need to earn about $11.00 more per hour to fully cover basic expenses. Black and Hispanic families would need to earn more than $12.00 per hour more.
“Full-time work alone isn’t enough to cover the everyday essentials most families need to support themselves, which creates significant financial hurdles to support children,” said Pamela Joshi, Ph.D., senior research scientist and lead study author. “We’re seeing that full-time work provides even fewer necessary resources to Black and Hispanic families. That’s a problem because it drives inequities in child well-being. These results are a wake-up call for decision makers to prioritize policies that address income inequality and racial and ethnic equity and extend real opportunities for economic self-sufficiency.”
The study offers unique insights about the consequences of declining wages and benefits on full-time working families. Among other key findings:
- More than half of full-time working Black and Hispanic families (52% and 59%, respectively) do not earn enough to meet their basic needs, compared to 25% of White families and 23% of Asian families. These inequities persist even after controlling for education, occupation and other characteristics.
- The median low-income family who works full time and does not earn a family budget needs an additional $11 more per hour, or about $23,500 in yearly earnings, to reach one. Black and Hispanic low-income families need to earn even more to cover a family budget: about $26,000 and $26,500 in additional annual earnings, respectively, compared to $20,000 for White low-income families.
- Low-income Hispanic families have extremely limited access to benefits through their employers. More than half (52%) do not have health insurance, and more than three-quarters (76%) do not have pensions.
- 43% of low-income Hispanic families do not earn a family budget nor do they have access to employer benefits. This is nearly twice as high as low-income White families (24%). 41% of low-income immigrant families also do not earn a family budget or have access to employer benefits.
“It’s critical that we have policies in place that support working families today; those policies also help ensure children and families can thrive in the future,” said Dolores Acevedo-Garcia, Ph.D., study co-author and project director of the diversitydatakids.org research program. “When families can’t afford their basic needs, it places stress on parents’ health, and it increases the likelihood that children will continue to lack resources and opportunities that promote their well-being.”
“The potential harm to parent’s health and children's development make it imperative to increase or supplement wages and employer-provided benefits, and to expand anti-poverty policies,” said Abigail N. Walters, study co-author and Ph.D. student at Brandeis University. “Jobs and the social safety net work hand-in-hand to support children’s wellbeing.”
There are a number of ways that U.S. policymakers can advance equitable work policies that support working families’ abilities to reach economic self-sufficiency, close child opportunity gaps and address racial/ethnic inequities in health and education. These include:
- Making more jobs “good jobs” that provide a living wage, family-sustaining benefits, predictable and adequate hours, respectful and safe working conditions, and equitable opportunities for advancement;
- Expanding income support to low-income working families and providing access to educational and training programs tied to employment in higher wage industries;
- Expanding paid family and medical leave and child care subsidies so that more parents can afford to care for their children and their own health while they are working;
- Making eligibility for safety net policies more inclusive to fully include children in immigrant families, multi-generational families and those with non-custodial parents, who are more likely to be Hispanic and Black; and
- Making it easier for eligible families to access programs by simplifying application processes and increasing public awareness.
How we conducted this study
This study draws on the 2015–2019 Annual Social and Economic Supplement (ASEC) and the Current Population Survey (CPS). The annual ASEC sample size is about 98,000 households, which includes an oversample of Hispanic households. To ensure adequate sample sizes by race-ethnicity and nativity, we pooled five years of cross-sectional data.
Read the full study, Families’ Job Characteristics and Economic Self-Sufficiency: Differences by Income, Race-Ethnicity, and Nativity, at: https://www.rsfjournal.org/content/8/5/67