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More Jobs Don’t Mean Less Poverty

Monday, April 7, 2014 at 4:15 PM

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Some economists say that better jobs numbers no longer mean lower poverty numbers. More people may be working, but earnings from those new jobs aren't enough to support families, and that's causing a rise in the number of so-called "working poor". ideastream's Tony Ganzer spoke with Claudia Coulton, a Professor of Urban Research and Social Change at Case Western Reserve University.

There is often much attention on federal and state jobs reports, focusing on the number of jobs created.  On Friday for example the news was that the U.S. economy created 192,000 jobs in March...not quite the jump that some experts have been waiting for, but still a good sign. 

Some economists disagree though, arguing that yes, more people may be working, but earnings from those new jobs aren’t enough to support families - or even a single person - and that’s causing a rise in the number of so-called “working poor”.  For more on this ideastream’s Tony Ganzer spoke with Claudia Coulton, a Professor of Urban Research and Social Change at Case Western Reserve University.  She says in the past lower unemployment meant lower poverty, but that’s changed post-2008 recession. 

COULTON: “Poverty has remained high even though we have seen some fall in unemployment.”

GANZER: “Is there any idea what is contributing to this? I can think of a few things: maybe wage levels, maybe the hours people have in the jobs they are getting.  Is there a particular variable that is more offensive than the others?”

COULTON: “The variables you mention work together, sort of, to create this picture.  We see a lot of the poor today are working poor, not unemployed poor.  So you can right there on the surface of it see why the unemployment rate could go down but if it’s creating a more sizeable group of working poor then the poverty rate is not really moving in the right direction.  The wages have deteriorated especially for people new in the labor market or people with lower levels of education.  That has been due to a number of reasons…we haven’t had an increase in the minimum wage for many years, and also, we’ve moved in Northeast Ohio and in other parts of Ohio, to have more jobs that are not high-paying jobs.”

GANZER: “What do you think that we can extract from this trend?  I know a lot of attention, understandably, is on the number of jobs that are created, and how the job market is looking, but it seems like that is not enough.”

COULTON: “No, just concentrating on the number of jobs is not enough, but it can be rather tedious to be constantly tracking the types of jobs and the payment rate for those jobs, but labor economists do track that, and they see this growing inequality of wages and earnings, so that we have more people at the top and more people at the bottom. The job creation is not created equal, you might say.  The solutions, there are several I could point to.  Many people are talking about trying to get an increase in the minimum wage, and that does put a floor under the bottom this problem, but even at somewhat above the minimum wage you can still find yourself in working poverty if you have a family to support.”

GANZER: “That’s something that we see maybe on the federal or the state level-can you point to anything regionally, especially in Northeast Ohio, that maybe helps folks that have a job, but they’re still struggling?  Are there any success stories you can point us to?”

COULTON: “I wish I could point us to success stories.  Another federal program that is very helpful to the working poor is the earned income tax credit, but that is not an Ohio program, although some states have adopted their own earned income tax credit.  Another challenge for the working poor at this time is the cutbacks to food stamps or the SNAP benefits program.  I think what we’d have to say is we’re not really seeing sufficient action at the state and local level, but frankly because labor is mobile, localized solutions to the wages problem are not really going to have a very big impact.  That being said, the kinds of local solutions that we see-an expansion of the food network, and food pantries, the work that charities do to try to help people with a problem with their rent or their heat-these are not permanent solutions, these are stop-gap solutions.  It’s tough to fight this problem at the local level.”

Also see: Ideastream’s Brian Bull’s series “The Working Poor”

Tags

Economy, Community/Human Interest

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