Monthly Labor Review November/December 2003 13

Working Poor

The working poor

in 2001

About 6.8 million workers in 3.7 million families

lived below the poverty level in 2001, an increase

for the first time since 1992–93; working youth

continue to experience high incidence of poverty

Abraham T. Mosisa

Abraham T. Mosisa

is an economist in the

Division of Labor Force

Statistics,

Bureau of Labor

Statistics.

E-mail:

Mosisa.Abraham@bls.gov

Poverty statistics are used to gauge the economic well-being of the Nation. The number and characteristics of people who experience economic hardship because of very low

income levels is a function of very complex socioeconomic, family, and individual issues.1

A number of people who are in poverty also

participate significantly in the labor force. In

2001, 32.9 million people of all ages, or 11.7 percent of the population, lived at or below the official poverty level. 2 Most of them were children,

or adults who had not participated in the labor

force during the year. However, about 6.8 million

were 16 years and older and were in the labor

force for 27 weeks or more during the year. These

persons, also referred to as the working poor, represented 4.9 percent of all persons 16 years and

older who were in the labor force for 27 weeks or

more—an increase of 319,000 (0.2 percentage

point) from the previous year.

This article defines the working poor3 as individuals who spend at least 27 weeks in the labor

force (that is, working or looking for work), but

whose incomes fell below the official poverty

level. The income thresholds used to determine

persons’ poverty status differ, depending on

whether the individuals are family members or

are living alone or with nonrelatives. For family

members, the poverty threshold is determined by

their families’ total income; for persons not living

in families, their personal income is used as the

determinant. This article presents data on the

relationships between labor force activity and

poverty in 2001 for individual workers, including

those who were family4members and those who

did not live with their families. A variety of economic, demographic, educational, occupational,

and family characteristics of the working poor are

explored. Also, three major labor market problems that can impede a worker’s ability to earn an

income above the poverty threshold5 are examined. In the final section, the trend in working

poor since 1987 is discussed. For the most part,

the data used in this article were collected in the

2002 Annual Social and Economic Supplement to

the Current Population Survey (CPS).6

Overall characteristics

In 2001, the proportion of those who were in the

labor force for 27 weeks or more who were classified as working poor continued to be higher for

women than for men—5.5 versus 4.4 percent—

even though the proportion of working men living in poverty edged up by 0.3 percentage point

over the year, while that for women was unchanged. However, the rates for both groups remain well below their decade-high levels in 1993

of 7.3 percent for women and 6.2 percent for men.

(See table 1.)

Young workers are more vulnerable to poverty than those in other age groups, partly because their earnings are lower and they are more

likely to be unemployed than older workers.
14 Monthly Labor Review November/December 2003

Working Poor

Among the youth who were in the labor force for 27 weeks or

more in 2001, 10.4 percent of 16- to 19-year-olds and 9.9 percent of 20- to 24-year-olds were in poverty. These rates were

more than double the rate for workers aged 35 to 44 (4.3 percent), and more than triple the rate for workers 45 to 54 years

of age (2.9 percent).

Minority teenage workers, in particular, are more likely to

be in poverty. Among teenagers who were in the labor force

for 27 weeks or more, 23.3 percent of blacks and 14.3 percent

of Hispanics were in poverty, compared with 8.8 percent of

whites. Overall, Hispanic and black workers were disproportionately represented among the working poor, as they continued to experience poverty at rates that were more than

twice that of whites (10.1 and 9.6 percent versus 4.3 percent,

respectively).

Education. The incidence of living in poverty greatly diminishes as workers achieve higher levels of education. People

with higher levels of education have better access to higher

paying jobs, such as managerial and professional specialty

occupations, than those with lower levels of education. In

2001, only 1.5 percent of college graduates were counted

among the working poor, compared with 5.8 percent of high

school graduates (no college), and 13.1 percent of high school

dropouts. At all major educational levels except college graduates, women were more likely than men to be among the working poor. At all major educational levels, blacks were more

likely to be among the working poor than were whites. (See

table 2.)

Among whites, the differences in the working poor rate by

education between men and women were relatively small. For

example, the working poor rate for white men without a high

school diploma was 11.1 percent, compared with 13.6 percent

for the women. Among white college graduates, women were

a little less likely than men to be among the working poor – 1.2

percent and 1.6 percent, respectively. Among blacks, however, the situation was different; black women were considerably more likely than their male counterparts to be among the

working poor. About 25 percent of black women without a

high school diploma were among the working poor, compared

with 15.4 percent of men; 2.6 percent of black women college

graduates were among the working poor, compared with 1.9

percent of men. The gender difference in the working poor

rates among blacks by education may partly reflect the fact

that 4 of 10 black families are maintained by women.

Occupation. Workers in occupations characterized by relatively low earnings—such as service occupations and farm

Table 1. Persons in the labor force for 27 weeks and more: poverty status by age, sex, race, and Hispanic origin, 2001

[Numbers in thousands]

 Below poverty level Rate1

 Age and sex Total White Black Hispanic Total White Black Hispanic Total White Black Hispanic

origin origin origin

Total, 16 years and older ....... 138,143 114,874 15,657 16,463 6,802 4,906 1,503 1,659 4.9 4.3 9.6 10.1

16-19 years ............................ 4,848 4,136 519 710 506 362 121 102 10.4 8.8 23.3 14.3

20-24 years ............................ 13,011 10,667 1,648 2,350 1,292 934 282 254 9.9 8.8 17.1 10.8

25-34 years ............................ 31,307 25,314 3,966 5,349 1,988 1,432 474 607 6.3 5.7 11.9 11.3

35-44 years ............................ 36,368 29,874 4,399 4,229 1,581 1,134 336 441 4.3 3.8 7.6 10.4

45-54 years ............................ 32,128 27,034 3,363 2,530 922 660 190 173 2.9 2.4 5.6 6.8

55-64 years ............................ 16,008 13,902 1,386 1,081 443 339 78 70 2.8 2.4 5.6 6.5

65 years and older................. 4,473 3,948 377 215 70 45 23 12 1.6 1.1 6.2 5.6

Men, 16 years and older ....... 74,316 62,899 7,295 9,787 3,275 2,562 520 992 4.4 4.1 7.1 10.1

16-19 years ............................ 2,483 2,119 261 405 232 170 53 59 9.4 8.0 20.2 14.5

20-24 years ............................ 6,854 5,708 761 1,451 545 417 85 153 7.9 7.3 11.1 10.6

25-34 years ............................ 17,248 14,286 1,843 3,350 953 775 137 377 5.5 5.4 7.4 11.3

35-44 years ............................ 19,611 16,490 2,010 2,501 782 616 119 275 4.0 3.7 5.9 11.0

45-54 years ............................ 16,949 14,471 1,572 1,348 501 384 77 81 3.0 2.7 4.9 6.0

55-64 years ............................ 8,599 7,545 651 602 231 179 41 39 2.7 2.4 6.3 6.5

65 years and older................. 2,572 2,279 196 129 32 21 9 8 1.2 0.9 4.5 5.9

Women, 16 years and older .. 63,827 51,976 8,363 6,677 3,526 2,344 983 667 5.5 4.5 11.8 10.0

16-19 years ............................ 2,365 2,017 258 305 274 192 68 43 11.6 9.5 26.5 14.0

20-24 years ............................ 6,157 4,958 886 898 747 517 197 101 12.1 10.4 22.3 11.3

25-34 years ............................ 14,059 11,028 2,122 1,999 1,035 657 337 230 7.4 6.0 15.9 11.5

35-44 years ............................ 16,757 13,384 2,389 1,728 799 518 216 166 4.8 3.9 9.1 9.6

45-54 years ............................ 15,179 12,562 1,790 1,182 421 276 112 91 2.8 2.2 6.3 7.7

55-64 years ............................ 7,409 6,357 736 479 212 160 37 31 2.9 2.5 5.0 6.5

65 years and older................. 1,900 1,669 181 85 38 24 14 4 2.0 1.4 7.9 5.2

1

 Number below the poverty level as a percent of the total in the labor force for 27 weeks or more.
Monthly Labor Review November/December 2003 15

occupations—had a relatively high

likelihood of being among the working poor.7 During 2001, farm workers

and service employees were more

likely to be classified as working poor

than were workers in other occupations. In fact, the 2 million working

poor in service occupations accounted for 31.3 percent of all those

classified as the working poor. Within

the category of service workers, 20.4

percent of private household workers

(that is, housekeepers, childcare

workers, and cooks), were among the

working poor. About 11.6 percent of

service workers such as bartenders,

waiters and waitresses, dental assistants, janitors, and hairdressers (excluding private households or protective services occupations) were classified as working poor. In contrast,

persons employed in managerial and

professional specialty occupations,

occupations with typically high earnings, were least likely to be classified

as working poor (1.4 percent). (See

table 3.)

Table 2. Persons in the labor force for 27 weeks or more: poverty status by educational

 attainment, race, and sex, 2001

Educational attainment and race Rate1 total Men Women

Total, 16 years and older ........................... 4.9 4.4 5.5

Less than a high school diploma .............. 13.1 11.6 15.4

Less than 1 year of high school ............... 15.5 15.4 15.9

1-3 years of high school ........................... 12.6 10.5 15.7

4 years of high school, no diploma ........... 8.8 6.5 12.6

High school graduates, no college ............ 5.8 4.9 7.0

Some college, no degree ........................... 4.4 3.6 5.2

Associate degree ....................................... 2.6 2.0 3.2

College graduates ...................................... 1.5 1.6 1.5

...................................................................

White, 16 years and older ......................... 4.3 4.1 4.5

Less than a high school diploma .............. 12.0 11.1 13.6

Less than 1 year of high school ............... 16.1 15.8 16.7

1-3 years of high school ........................... 10.7 9.3 12.9

4 years of high school, no diploma ........... 7.2 5.8 9.9

High school graduates, no college ............ 4.7 4.3 5.3

Some college, no degree ........................... 3.9 3.4 4.5

Associate degree ....................................... 2.2 1.8 2.7

College graduates ...................................... 1.4 1.6 1.2

...................................................................

Black, 16 years and older ......................... 9.6 7.1 11.8

Less than a high school diploma .............. 20.0 15.4 25.0

Less than 1 year of high school ............... 17.9 16.2 20.4

1-3 years of high school ........................... 21.7 17.1 26.3

4 years of high school, no diploma ........... 14.5 7.2 23.3

High school graduates, no college ............ 12.3 8.7 15.8

Some college, no degree ........................... 6.6 4.4 8.5

Associate degree ....................................... 5.3 2.7 7.0

College graduates ...................................... 2.3 1.9 2.6

1 Number below the poverty level as a percent of the total in the labor force for 27 weeks or more.

Table 3. Poverty status of persons in the labor force for 27 weeks or more who worked during the year by occupation

 of longest job held, race, and sex, 2001

Men Women White Black

.........................................................................................................................

Total, 16 years and older2 ....................................................................................................................................... 4.7 4.1 5.3 4.1 8.8

Managerial and professional specialty ............................................................ 1.4 1.3 1.6 1.3 3.2

 Executive, administrative, and managerial ................................................. 1.3 1.3 1.4 1.2 3.2

 Professional specialty ................................................................................. 1.6 1.4 1.7 1.4 3.2

Technical, sales, and administrative support ................................................. 4.2 3.2 4.7 3.5 8.7

 Technicians and related support .................................................................. 1.6 1.6 1.5 1.5 3

 Sales occupations ........................................................................................ 5.9 3.6 8.3 4.8 16.0

 Administrative support, including clerical .................................................... 3.3 3.1 3.4 2.8 5.9

Service occupations ........................................................................................ 10.8 8.2 12.6 9.5 15.9

 Private household ........................................................................................ 20.4 3 20.3 18.3 28.0

 Protective service ........................................................................................ 3.0 2.2 6.1 1.9 6.3

 Service, except private household and protective ..................................... 11.6 10.2 12.4 10.3 17.3

Precision production, craft, and repair ........................................................... 4.3 4.2 5.0 4.2 6.2

Operators, fabricators, and laborers ............................................................... 5.7 5.2 7.3 5.3 7.2

 Machine operators, assemblers, and inspectors ........................................ 4.7 4.1 5.7 4.4 5.9

 Transportation and material moving occupations ........................................ 4.4 4.0 8.1 4.1 4.7

 Handlers, equipment cleaners, helpers, and laborers ................................. 8.3 7.8 10.4 7.6 11.7

Farming, forestry, and fishing .......................................................................... 14.3 14.4 14.0 14.4 17.8

Rate1 total Occupation and race

1 Number below the poverty level as a percent of the total in the labor

force for 27 weeks or more who worked during the year.

2 Includes a small number of persons whose last job was in the Armed Forces.

3 Data not shown where base is less than 80,000.
16 Monthly Labor Review November/December 2003

Working Poor

Family characteristics

Nearly 3.7 million families with at least one member in the labor

force for 27 weeks or more (5.9 percent of all such families)

lived below the poverty level in 2001, up from 5.6 percent in

the previous year. Married-couple families with one member

in the labor force for 27 weeks or more had a lower incidence

of poverty than did either families maintained by women or

families maintained by men (no spouse present). This was

true regardless of which member of the married-couple family

was in the labor force. (See table 4.)

The poverty threshold for families reflects both the total

family income and the number of family members. The more

Table 4. Primary families: Poverty status, presence of related children, and work experience of family members in the

 labor force for 27 weeks or more, 2001

[Numbers in thousands]

 Characteristic Total families Below poverty level Rate1

Total primary families .................................................... 62,251 3,697 5.9

.........................................................................................

With related children under age18 .................................. 35,542 3,125 8.8

Without children ............................................................... 26,708 573 2.1

With one member in the labor force ................................ 25,626 3,121 12.2

With two or more members in the labor force ................. 36,625 576 1.6

 With two members ......................................................... 30,712 532 1.7

 With three or more members ......................................... 5,913 44 .8

Married-couple families ............................................... 47,851 1,632 3.4

 With related children under age 18 ............................... 26,159 1,303 5.0

 Without children ............................................................. 21,692 329 1.5

 With one member in the labor force .............................. 15,550 1,231 7.9

 Husband ...................................................................... 11,691 944 8.1

 Wife .............................................................................. 3,224 246 7.6

 Relative ........................................................................ 635 41 6.5

With two or more members in the labor force ................. 32,301 400 1.2

 With two members ........................................................ 27,301 374 1.4

 With three or more members ........................................ 5,000 26 .5

Families maintained by women .................................... 10,507 1,725 16.4

With related children under age 18 ................................. 7,297 1,557 21.3

Without children ............................................................... 3,210 168 5.2

With one member in the labor force ................................ 7,657 1,591 20.8

 Householder ................................................................. 6,367 1,400 22.0

 Relative ........................................................................ 1,290 191 14.8

With two or more members in the labor force ................. 2,850 134 4.7

Families maintained by men ......................................... 3,893 341 8.8

With related children under age18 .................................. 2,086 265 12.7

Without children ............................................................... 1,807 76 4.2

With one member in the labor force ................................ 2,419 299 12.3

 Householder ................................................................. 1,972 240 12.2

 Relative ........................................................................ 447 59 13.1

With two or more members in the labor force ................. 1,474 42 2.9

1 Number below the poverty level as a percent of the total in the labor force for 27 weeks or more.

NOTE: Data relate to primary families with at least one member in the labor force for 27 weeks or more

The larger the family, however, the higher the level of income needed to keep the family out of poverty. In addition,

the presence of children can reduce the ability of one or both

of the parents to participate fully in the labor force. Thus,

working families with children, regardless of type of family,

workers a family has, the higher its income is likely to be and

therefore the less likely the family is to be living below the

poverty line. For example, only 0.8 percent of families with

three or more members in the labor force for 27 weeks or more

and 1.7 percent of families with two such labor force participants were among the working poor in 2001. In contrast, 12.2

percent of families with only one member in the labor force for

27 weeks or more were in poverty.
Monthly Labor Review November/December 2003 17

had higher poverty rates than families without children. The

difference was greatest among families maintained by women.

Among these families, 21.3 percent of those with children

were poor in 2001, compared with 5.2 percent of those without children.

Working wives are less likely than working husbands to be

poor, primarily because working wives are more likely to be in

families with a second earner, usually a husband. In 2001, 1.7

percent of married women who were in the labor force for 27

weeks or more were in poverty, compared with 3.1 percent of

married men. In comparison, 17 percent of women who maintained families and who were in the labor force for 27 weeks or

more were in poverty, as shown below:

 Working poor rate

Husbands ........................................ 3.1

Wives .............................................. 1.7

Maintaining families

 Women, no spouse present .......... 17.0

 Men, no spouse present ............... 8.3

Unrelated individuals ...................... 8.1

 Living alone ................................... 5.3

 Living with others ........................ 11.4

Unrelated individuals. Of the 29.4 million unrelated individuals who were in the labor force for 27 weeks or more in 2001,

8.1 percent lived below the poverty level. This was up from

7.6 percent in 2000.

The living situations of unrelated individuals are characterized in one of two ways: some live by themselves, while

others share housing with unrelated persons. Unrelated individuals with low incomes often live with others in order to

share expenses and pool resources. But, because poverty

status for unrelated individuals is determined by their personal income and not by their household income, the poverty

measure for these unrelated individuals living with

nonrelatives may overstate their actual economic hardship.

Conversely, many of those who live alone do so because they

have sufficient incomes to support themselves. Persons living with unrelated individuals and who were labor force participants for more than 27 weeks in 2001 were more than twice

as likely as those living alone to be poor (11.4 percent and 5.3

percent, respectively). The proportion living in poverty increased for both of these groups over the year. Teenagers

who were in the labor force for 27 weeks or more and were

living on their own or with others not related to them were

more vulnerable to being poor than other unrelated individuals. In 2001, 39.5 percent of such teenagers lived below the

poverty level, up from 36.7 percent in 2000.

Labor market problems

People who usually work full time are far less likely to live in

poverty than are others. Yet, there remains a sizable group of

full-time workers who live below the poverty threshold.

Among those who participated in the labor force for more

than half of the year and who usually worked in full-time wage

and salary jobs, 3.5 million (or 3.2 percent) were classified as

working poor in 2001. This proportion was virtually unchanged from a year earlier, after trending downward from

1994 to 2000. (See table 5.)

 Table 5. Persons in the labor force for 27 weeks or more: Poverty status and labor market problems of full-time

 wage and salary workers, 2001

[Numbers in thousands]

At or Below poverty level

Total above

poverty

 level

Total, full-time wage and salary workers .......................... 109,117 105,630 3,487 100.0 3.2

..........................................................................................

No unemployment, involuntary part-time

employment, or low earnings 2 .................................................................. 88,769 88,176 593 17.0 0.7

..........................................................................................

Unemployment only .......................................................... 6,762 6,399 363 10.4 5.4

Involuntary part-time employment only ............................ 2,658 2,598 60 1.7 2.2

Low earnings only ............................................................. 7,128 5,601 1,526 43.8 21.4

..........................................................................................

Unemployment and involuntary part-time employment .... 1,172 1,079 93 2.7 7.9

Unemployment and low earnings ...................................... 1,459 959 500 14.3 34.3

Involuntary part-time employment and low earnings ....... 726 557 169 4.8 23.2

Unemployment, involuntary part-time employment,

 and low earnings .......................................................... 444 261 184 5.3 41.3

Poverty status and labor market problems

1 Number below the poverty level as a percent of the total in the labor

force for 27 weeks or more.

2 The low earnings threshold in 2001 was $260.66 per week.

NOTE: Data refer to persons 16 years and older.

Number Percent Rate1
18 Monthly Labor Review November/December 2003

Working Poor

There are three major labor market problems that can

impede such workers’ ability to earn an income above the

poverty threshold: Low earnings, periods of unemployment, and involuntary part-time employment.8

In 2001, about 83 percent of the working poor who

usually worked full time experienced at least one of

these major labor market problems. Low earnings continued to be the most common condition encountered,

with 68.2 percent facing low earnings, either alone or in

conjunction with other labor market problems. About

32.7 percent of the working poor experienced unemployment either alone or in conjunction with other problems. Only 5.3 percent experienced all three problems—

low earnings, unemployment, and involuntary part-time

employment.

Some 593,000, or 17 percent, of the working poor did

not experience any of the three primary labor market problems in 2001. Their classification as working poor may be

explained by other factors, including short-term employment, some weeks of voluntary part-time work, or a family

structure that increases the risk of poverty.

Trend

In 2001, the working poor represented 4.9 percent of all persons who were in the labor force for 27 weeks or more. This

was an increase of 0.2 percentage point from the previous

year. The rise in the percent of those classified as working

poor in 2001 was the first year-to-year increase since 1992-93

and reflected the 2001 recession. Poverty rates of persons

who were in the labor force for 27 weeks or more hovered

between 5.3 percent and 5.5 percent from 1987 to 1990, and

rose from 5.7 and 6.7 percent between 1991 and 1997. From

1998 to 2001, the rates were relatively lower, ranging from 4.7

percent to 5.4 percent. (See chart 1.)

IN SUMMARY, about 6.8 million workers in 3.7 million families

lived below the poverty level in 2001. The number and the

proportion of those classified as working poor increased over

the year for the first time since 1992–93. Still, the proportion in

the labor force remains well below the series high in 1993.

Working youth in general and minority teens in particular continue to experience high incidence of poverty. The likelihood

1987 1989 1991 1993 1995 1997 1999 2001

4

4.5

5

5.5

6

6.5

7

4

4.5

5

5.5

6

6.5

7

Chart 1. Poverty rates of persons in the labor force for 27 weeks or more, 1987–2001

[percent] [percent]
Monthly Labor Review November/December 2003 19

of being among the working poor is also higher among families maintained by women (no spouse present), the least educated, and those employed as farm workers and in service

occupations.

 1 More detailed information on the working poor in 2001 was discussed in Bureau of Labor Statistics Report 968, June 2003. This article

summarizes the findings of that report.

2 Poverty in the United States: 2001, Current Population Reports,

Series P60–219, (U.S. Bureau of the Census, September 2002), p.1.

3

 In 1989, BLS researchers Philip Rones and Bruce Klein developed

BLS measure of the working poor by linking individuals’ labor market

efforts to the poverty status of their families. Rones and Klein defined

the “working poor” as persons who devoted more than half of the year

to working or looking for work and who lived in families with incomes

below the official poverty level.

4

 A family is defined as a group of two or more persons residing

together who are related by birth, marriage, or adoption. Persons in

related subfamilies—married couples or parent-child groups sharing the

living quarters of another family member—are included as members of

that family and are not distinct family units. The count of families used

in this report does not include unrelated subfamilies, such as lodgers,

guests, or resident employees living in a household but not related to

the householder (the person in whose name the housing unit is owned or

rented). Families are classified either as married-couple families or as

those maintained by men or women without spouses present. Family

status is determined at the time of the March interview, and thus may be

different from that of the previous year.

5

 Poverty statistics presented in this report are based on definitions

developed by the Social Security Administration in 1964 and revised by

Federal interagency committees in 1969 and 1981. These definitions

originally were based on the Department of Agriculture’s Economy

Food Plan and reflected the different consumption requirements of

families, based on factors such as family size and the number of children

less than 18 years of age. The actual poverty thresholds vary in

accordance with the makeup of the family. In 2001, the average povNotes

erty threshold for a family of four was $18,104; for a family of nine or

more persons, the threshold was $36,286; and for an unrelated individual aged 65 or older, it was $8,494. Poverty thresholds are updated

each year to reflect changes in the Consumer Price Index for All Urban

Consumers (CPI-U). The thresholds do not vary geographically.

6

 The primary source of data in this report is the 2002 Annual

Social and Economic Supplement to the Current Population Survey

(CPS). The CPS is a monthly survey of 60,000 households conducted by

the U.S. Census Bureau for the Bureau of Labor Statistics to collect

demographic, social, and economic information about persons 16 years

of age and older.

7

 Occupation refers to the occupation in which a person worked the

most weeks during the calendar year.

8

 The low earnings level, as first developed in 1987, represented the

average of the real value of the minimum wage between 1967 and 1987

for a 40-hour workweek. The base year of 1967 was chosen because

that was the first year in which minimum-wage legislation covered

essentially the same broad group of workers who currently are covered.

The low earnings level has subsequently been adjusted each year using

the CPI-U, so that the measure maintains the same real value that it held

in 1987. In 2001, the low earnings threshold was $260.66 per week.

For a more complete definition, see Bruce W. Klein and Philip L.

Rones, “A profile of the working poor,” Monthly Labor Review, October 1989, pp. 3–13. Involuntary part-time workers are persons who, in

at least 1 week of the year, worked fewer than 35 hours because of slack

work or business conditions, or because they could not find full-time

work. The number of weeks of involuntary part-time work is accumulated over the year. Unemployed persons are those who looked for

work while not employed or those who were on layoff from a job and

expecting recall. The number of weeks unemployed is accumulated

over the entire year.